FEDERAL COURT OF AUSTRALIA

AghaeiRad v Plus500AU Pty Ltd (Stay Application) [2025] FCA 1602

ORDERS

THE COURT ORDERS THAT:

1.    The first respondent’s interlocutory application dated 11 December 2024 be dismissed with costs.

2.    The second respondent’s interlocutory application dated 11 December 2024 be dismissed with costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THAWLEY J:

OVERVIEW

1    Plus500AU Pty Ltd (the first respondent) is part of a global multi-asset fintech group operating technology-based trading platforms. Plus500 Ltd (the second respondent) is Plus500AU’s parent company, incorporated in Israel. Plus500AU’s main business is the provision of an online trading platform (Plus500 Trading Platform) for trading in over-the-counter Contracts for Difference, known as CFDs. A CFD is a contract between a buyer and a seller linked to the movement of the price of an underlying financial instrument. The parties to the CFD agree to exchange the difference in the value of the underlying financial instrument between the time when the contract was opened and when it is closed.

2    The respondents (collectively, Plus500) advertise the Plus500 Trading Platform broadly. Non-professional investors or consumers can deposit as little as AUD100 into their trading accounts. About 80% of non-professional investors lose money.

3    Mr Ali AghaeiRad (the applicant) completed an online registration process to access relevant services and trade on the Plus500 Trading Platform. During this process, Mr AghaeiRad checked a box confirming the statement: “I have read, understood and agree to the terms of” various hyperlinked documents, which included a “User Agreement”. Although Mr AghaeiRad checked the box confirming that he had done so, he had not in fact opened or read the User Agreement or any of the other hyperlinked documents: AghaeiRad 1 at [31(d)].

4    The issues between the parties revolve around an arbitration term contained in cl 23.3 of the User Agreement: CBC2838–9. Clause 23 provided:

23. DISPUTE RESOLUTION

23.1    Except to the extent that this section 23 is inconsistent with the requirements of any legislative or regulatory regime, the dispute resolution process set out in this section shall apply. The parties must use all their reasonable endeavours to resolve any dispute arising in connection with the Client Agreements or any Transactions there under.

23.2    If the parties fail to resolve a dispute within 5 business days of one party giving notice to the other of the dispute, either party may, by giving notice to the other, refer the dispute to the parties’ Senior Officers (where you are an individual no such referral is applicable) who, each party must ensure, must co-operate in good faith to resolve the dispute as amicably as possible within 10 days of the dispute being referred to them.

23.3    If the Senior Officers (or an individual and our Senior Officer) fail to resolve the dispute within 10 days of the dispute being referred to them, the parties must, at the written request of either party and within 10 days of receipt of the request, refer the dispute to mediation in accordance with, and subject to, the Resolution Institute’s Mediation Rules. The costs of the mediator shall be met equally by the parties. If the dispute or difference is not settled within 30 days of referral to mediation (unless such period is extended by agreement of the parties), it shall be and is hereby submitted to arbitration in accordance with, and subject to, the Resolution Institute Arbitration Rules. Unless the parties agree upon an arbitrator, either party may request a nomination from the Chair of Resolution Institute.

23.4    This section does not limit your rights (if applicable) to take a dispute to external dispute resolution scheme of which we are a member.

5    In summary:

(a)    Clause 23.1 required the parties to use all reasonable endeavours to resolve any dispute (except to the extent inconsistent with any applicable legislative or regulatory regime).

(b)    Clause 23.2 provided that, if the parties failed to resolve the dispute within five days of giving notice of the dispute, then either party could refer the dispute to the parties’ “Senior Officers” who were required to co-operate in good faith to resolve the dispute within ten days. This clause would not apply where the customer was an individual.

(c)    Clause 23.3 contained two components:

(i)    failing settlement of the dispute under cl 23.2 within ten days, either party could require mediation, the costs of which would be borne equally;

(ii)    if the dispute was not settled within 30 days of referral to mediation, and subject to any agreed extension, the dispute would be automatically referred to arbitration under the Resolution Institute Arbitration Rules.

(d)    Clause 23.4 provided that cl 23 did not limit a customer’s right to take a dispute to an external dispute resolution scheme of which Plus500AU was a member. Accordingly, customers had access to the Complaint Resolution Scheme administered by the Australian Financial Complaints Authority (AFCA).

6    Mr AghaeiRad began trading on the Plus500 Trading Platform on 20 August 2020. By 17 June 2021, he had lost all of the money he had deposited into his trading account, an amount of $111,948: AghaeiRad 1 at [37].

7    Mr AghaeiRad commenced representative proceedings under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) on 24 November 2023. On 12 September 2024, a competing representative proceeding against Plus500AU was permanently stayed: NSD1017/2023. Mr AghaeiRad alleges Plus500 engaged in misleading or deceptive conduct and unconscionable conduct in breach of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). Mr AghaeiRad also makes a claim for breach of contract against Plus500AU.

8    Mr AghaeiRad’s claims focus on:

    the manner in which the CFDs and Plus500 Trading Platform were marketed to the public;

    the manner in which prospective traders were encouraged or “nudged” through financial incentives and inducements (the Plus500 Inducements) to sign up or commence, re-commence or increase the frequency and volume of trading;

    the manner in which traders, once an account was opened, were encouraged or “nudged” through notifications by email, push notifications and SMS (the Plus500 Notifications) to continue or re-commence trading or to increase the frequency and volume of trading;

    the operation by Plus500 of a “systemic referral program” known as “500Affiliates” (the Plus500 Affiliates Program), under which third parties were incentivised to refer as many investors to Plus500 as possible, without Plus500 having sufficient systems to guard against various matters including referrals of unsuitable potential investors;

    the manner in which the Plus500 Inducements, the Plus500 Notifications and the Plus500 Affiliates Program, together with the design and “choice architecture” of the Website, App and Trading Platform operated to target investors’ neural reward systems and to encourage impulsive or compulsive, addictive and high risk-taking trading behaviour;

    the terms of the User Agreement which regulated the contractual relationship between Plus500AU and the traders or investors, including the terms providing for Plus500 to make “Margin Calls” which, if not met, resulted in an “Automatic Close Out” and the imposition of “Inactivity Fees”, “Withdrawal Fees”, a “Spread” and other fees;

    a “Demo Account”, which investors and potential investors were permitted to access and use with a notional amount of AUD50,000, topped up automatically, which did not accurately reflect the real risk of Margin Calls and Automatic Close Outs; and

    the manner in which Plus500AU assessed the suitability of investors and potential investors to trade CFDs through the Plus500 Trading Platform.

9    Plus500 seeks orders that Mr AghaeiRad’s representative proceeding be permanently stayed and that the parties be referred to arbitration, relying on the arbitration term in cl 23.3 of the User Agreement and s 8(1) of the Commercial Arbitration Act 2010 (NSW) (NSW Arbitration Act). Section 8(1) of the NSW Arbitration Act provides:

8    Arbitration agreement and substantive claim before court (cf Model Law Art 8)

(1)    A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

10    To make an order staying the proceeding and referring the parties to arbitration under s 8(1), the Court must be satisfied that:

(a)    Mr AghaeiRad and Plus500 are parties to an “arbitration agreement” for the purposes of ss 7 and 8;

(b)    any arbitration under that agreement would be a “domestic commercial arbitration” within the meaning of s 1(1); and

(c)    the proceeding is brought “in a matter” which is the subject of the arbitration agreement within the meaning of s 8(1).

11    There was no issue between the parties that an arbitration under the agreement would be “domestic”. Mr AghaeiRad contended that the other requirements referred to above were not met and that the stay applications should be dismissed for three reasons:

(a)    First, the NSW Arbitration Act does not apply to the subject matter of this proceeding because it is a “consumer claim” and not a “commercial arbitration”.

(b)    Secondly, s 8(1) of the NSW Arbitration Act does not apply because the dispute before the Court is not the subject of any “arbitration agreement” for two reasons:

(i)    Mr AghaeiRad did not agree to the arbitration term in cl 23.3, such that it did not become a term, or form part, of the contract; and/or

(ii)    the subject matter of the proceeding falls outside the arbitration term.

(c)    Thirdly, even if the dispute is the subject of an “arbitration agreement”, s 8(1) of the NSW Arbitration Act does not apply because cl 23.3 is “null and void, inoperative or incapable of being performed”, within the meaning of the proviso in s 8(1), for three reasons:

(i)    the matters the subject of the proceeding are not arbitrable;

(ii)    the arbitration term is an unfair contract term voided by s 12BF of the ASIC Act; and/or

(iii)    Plus500’s enforcement of the arbitration term would involve statutory unconscionability contrary to s 12CB of the ASIC Act.

12    For the reasons which follow:

(a)    Mr AghaeiRad’s first basis for contending that s 8(1) of the NSW Arbitration Act does not apply must be rejected. There is a good argument that some arbitrations of “ordinary consumer claims”, or arising from “consumer sales” or “consumer relations”, would not be a “commercial arbitration” within the meaning of s 1(1) of the NSW Arbitration Act. However, whilst Mr AghaeiRad is a consumer, including within the meaning of s 12BC of the ASIC Act, and most of his claims involve what can be described as “consumer protection legislation”, if Mr AghaeiRad’s dispute were referred to arbitration, it would nevertheless be a “commercial arbitration”.

(b)    Mr AghaeiRad’s second basis for contending that s 8(1) does not apply must be rejected, because:

(i)    Mr AghaeiRad agreed to the arbitration term in cl 23.3 of the User Agreement; and

(ii)    the subject matter of the proceeding is within the scope of the arbitration term.

(c)    Mr AghaeiRad’s third basis for contending that s 8(1) does not apply should be accepted. A stay under s 8(1) of the NSW Arbitration Act cannot be granted because cl 23.3 is “null and void, inoperative or incapable of being performed” for two reasons:

(i)    the arbitration term is an unfair contract term voided by s 12BF of the ASIC Act; and

(ii)    Plus500AU’s enforcement of the arbitration term would involve statutory unconscionability contrary to s 12CB of the ASIC Act.

THE ARBITRATION WOULD BE A “COMMERCIAL ARBITRATION”

The NSW Arbitration Act applies only to “commercial arbitrations”

13    In 1985, the United Nations Commission on International Trade Law adopted the UNCITRAL Model Law on International Commercial Arbitration. The Model Law was amended in 2006.

14    The Model Law applies to “international commercial arbitration” (Art 1(1)) and has the force of law in Australia by operation of the International Arbitration Act 1974 (Cth). Each State and Territory has introduced legislation applying the Model Law to “domestic commercial arbitrations”. In New South Wales, that legislation is the NSW Arbitration Act. It is part of an integrated statutory framework for international and domestic commercial arbitration which implements the Model Law: Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13; 267 CLR 514 at [13] (Kiefel CJ, Gageler, Nettle and Gordon JJ).

15    Section 1(1) of the NSW Arbitration Act provides:

1    Scope of application (cf Model Law Art 1)

(1)    This Act applies to domestic commercial arbitrations.

…

Model Law note–

The term “commercial” should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business co-operation; carriage of goods or passengers by air, sea, rail or road.

16    The Model Law note forms part of the NSW Arbitration Act – see: s 2(5). It is in the same terms as fn 2 to Art 1(1) of the Model Law, being a footnote to the word “commercial” in the phrase “international commercial arbitration”. There is no definition of the phrase “commercial arbitration”.

17    In addition to the international context (see also Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45 at [191] (Allsop J, Finkelstein and Finn JJ agreeing) and the cases there cited), the following principles of construction are relevant:

(a)    A construction that would promote the purpose or object underlying the Act (whether or not expressly stated) is to be preferred to a construction that would not promote that purpose or object: s 33 of the Interpretation Act 1987 (NSW).

(b)    The NSW Arbitration Act states that it is to be interpreted having regard to the need to promote uniformity between its application to domestic commercial arbitrations and the application of the Model Law (by the International Arbitration Act) to international commercial arbitration: s 2A(1).

(c)    The NSW Arbitration Act expressly permits reference to documents of UNCITRAL and its working groups relating to the Model Law in interpreting the Act: s 2A(3). Section 2A(3) does not affect the application of s 34 of the Interpretation Act: s 2A(4).

(d)    Section 34 of the Interpretation Act regulates the consideration which may be given to extrinsic material. It operates according to its terms, but in summary permits such material to be considered to: (a) confirm that the meaning of the provision is the ordinary meaning conveyed by the text in context; and (b) determine the meaning of the provision if it is ambiguous or obscure or if the ordinary meaning in context leads to a result that is manifestly absurd or unreasonable.

Mr AghaeiRad contended that his dispute comprises a “consumer claim”

18    Mr AghaeiRad contended that an arbitration of a dispute comprising a “consumer claim” would not be a “commercial arbitration” within the meaning of s 1(1) of the NSW Arbitration Act.

19    A difficulty with this submission is that it is not clear what, in Mr AghaeiRad’s submission, comprises a “consumer claim” of a kind which takes an arbitration of the claim outside the notion of a “commercial arbitration”. Whether a claim is a “consumer claim” depends on the reason the question is asked. Characterisation of a claim as a “consumer claim” for one purpose does not necessarily mean it is a “consumer claim” for a different purpose. For example, a claim might be said to be a “consumer claim” having regard to one or more of the following: whether one of the parties is a “consumer” either generally, or within the meaning of a particular statutory regime; whether there was a consumer to business or business to business relationship; whether the claim is based on a consumer protection law; whether the claim is based on a transaction that is appropriately described as an “ordinary consumer transaction”.

20    Notwithstanding these difficulties, analysis of UNCITRAL documents, and those of its working groups, suggests it was contemplated that arbitrations of certain “ordinary consumer claims”, or relating to “consumer sales”, or arising out of “consumer relations”, would not be “commercial arbitrations” within the meaning of the Model Law.

21    Accepting that there may be some kinds of “consumer claims” an arbitration of which would not be a commercial arbitration, an arbitration of Mr AghaeiRad’s claims would nevertheless be a “commercial arbitration”, even if his claims involve or comprise what might appropriately be described as “consumer claims”.

22    To explain this conclusion, it is convenient to address first the argument that arbitrations of some “ordinary consumer claims”, or relating to “consumer sales”, or arising out of “consumer relations”, were not intended to be covered within the Model Law concept of “commercial arbitration”, adopted in the NSW Arbitration Act.

Some consumer claims or transactions were likely not intended to be covered

23    UNCITRAL’s initial mandate to the Working Group to draft the Model Law included that the text “should be geared to and only cover international arbitration”: Report of UNCITRAL on the Work of Its Eighteenth Session (United Nations, 1985, UN Doc ID A/40/17) at [18]; UNCITRAL Yearbook (United Nations, 1988) vol XVI. The NSW Arbitration Act must be construed in this international context, and the meaning of the phrase “commercial arbitration” in the NSW Arbitration Act must begin with its meaning in the Model Law.

24    The Report of the Working Group on International Contract Practices on the Work of Its Fourth Session (UNCITRAL, 1982, UN Doc ID A/CN.9/232) included a discussion of the Working Group’s consideration of tentative draft articles of the Model Law. At the time, one of two proposed alternative forms of Art 1 (Alternative B) contained a definition of the word “commercial”. Differing views were expressed about the need for, and terms of, the definition: at [30] to [32]. One of the suggestions was that “the term ‘commercial’ should be defined by way of listing legal relationships which were not commercial (eg consumer and employment relations)”: at [32] (emphasis added). The report does not suggest that there was a competing view that consumer and employment relations should be covered by the term “commercial”. Another suggestion was for the provision to “list examples of both legal relationships which would be considered commercial and those which would not be considered commercial”: at [32]. It was also suggested that some of the problems might be solved by an official commentary to the text: at [33].

25    The Secretariat’s notes submitted to the Working Group on International Contract Practices at its fifth session contained revised draft articles of the Model Law – see: Note by the Secretariat: Model Law on International Commercial Arbitration: Revised Draft Articles I to XXVI (UNCITRAL, 1982, UN Doc ID A/CN.9/WG.II/WP.40). The draft of Art 1 included the following proposed definition of “commercial” to be contained in the Model Law as Art 1(3):

“Commercial” refers to any [defined legal] relationship of a commercial [or economic] nature [including, for example, any trade transaction for the supply or exchange of goods, factoring, leasing, construction of works, consulting, engineering, commercial representation, investment, joint venture and other forms of industrial or business co-operation, financing, or providing of services].

26    Footnote 5 at the end of proposed Art 1(3) in the Note by the Secretariat contemplated that certain transactions would not be covered, nominating “consumer sales” (emphasis added):

Inclusion of such or a similar illustrative list could help to underline the desirable wide interpretation of the term “commercial” and, at least, make clear that the transactions listed are covered by the model law. If the Working Group decides not to retain such a list, some clarification might be achieved in a commentary, if one were to be published, in that case examples should also be given of transactions not covered by the model law, eg consumer sales.

27    Article 1(3) and fn 5 suggest agreement that “consumer sales” were transactions not intended to be captured within the concept “commercial” and perhaps suggest that the word “trade” in the phrase “trade transaction” in proposed Art 1(3) was intended to exclude “consumer sales” as opposed, for example, to business to business sales. The notes do not suggest there was a competing view that “consumer sales” should be treated as “commercial”.

28    As foreshadowed in the Note by the Secretariat, an Analytical Commentary to the draft text was published as a Report of the Secretary-General – see: Analytical Commentary on Draft Text of a Model Law on Commercial Arbitration (UNCITRAL, 1985, UN Doc ID A/CN.9/264). The Analytical Commentary “provides a summary of why a certain provision has been adopted and what it is intended to cover, often accompanied by explanations and interpretations of particular words”: at [5]. The draft text of Art 1(1) was as follows:

This Law applies to international commercial** arbitration, subject to any multilateral or bilateral agreement which has effect in this State.

29    The footnote represented by “**” was in similar terms to the Model Law note.

30    The Analytical Commentary included the observation that what was not covered was “for example, labour or employment disputes and ordinary consumer claims, despite their relation to business”: at [18]. This commentary focusses on the claim, rather than the relationship or the transaction. The Analytical Commentary was referred to in fn 1 in the Explanatory Note when the final Model Law as amended in 2006 was published in 2008.

31    Relevant history was examined in Holtzmann HM and Neuhaus JE, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1st ed, Kluwer Law International, 1994) at pp 32–5. The learned authors concluded that “employment disputes and ordinary consumer claims” were not intended to fall within the ambit of Art 1, even if it could be said that the claim had a connection with commercial relations or a commercial relationship. The same essential conclusion was reached in: Gaillard E and Savage J (eds), Fouchard Gaillard Goldman on International Commercial Arbitration, (Kluwer Law International, 1999) at [63]; Binder P, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions (4th ed, Kluwer Law International, 2019) at p 33; Holmes M and Brown C, The International Arbitration Act 1974 (1st ed, LexisNexis, 2018) at p 186.

32    As against those commentaries, in Born GB, International Commercial Arbitration (3rd ed, rev 2023, Kluwer International Law, 2021), the view was expressed that “the Model Law includes within its coverage both consumer and employment matters, subject to any specific non-arbitrability rules adopted in particular states pursuant to Article 1(5) of the Law”: at §2.03[B][2][a].

33    As to the final version of the Model Law note, I do not accept Plus500’s submission that the word “trade” in the phrase “trade transaction” was intended to distinguish a supply of goods or services in trade or commerce from a voluntary or non-arm’s length supply, or gift: 1RRS[8]. The use of the word “trade” to achieve this contended purpose is not supported by the UNCITRAL documents or by the balance of the examples which do not demonstrate a concern to excise gifts or non-arm’s length transactions.

34    Plus500 observed that many of the examples in the Model Law note as to the meaning of the word “commercial” – such as “banking”, “insurance”, “carriage of good or passengers by air, sea, rail or road” – are as likely as not to involve business to consumer transactions as businesses to business transactions: 1RRS[8].

35    That is true, but it does not lead to the result that the Model Law necessarily covers all ordinary consumer sale transactions, such as, for example: the purchase of a light globe; a simple consumer transaction with a bank or home and contents insurer; the purchase of a bus ticket; or a food delivery order, such as an Uber Eats order. The expert arbitrators who gave evidence at the hearing did not give any example of a consumer claim or an ordinary consumer sale transaction in fact being the subject of a commercial arbitration.

36    A substantial body of material indicates an intention that certain “consumer sales” were not to be regarded as “commercial”, and that an arbitration of certain “ordinary consumer claims”, or arising out of “consumer relations”, would not fall within the Model Law concept of “commercial”. I proceed on that basis.

An arbitration of Mr AghaeiRad’s claims would be a “commercial arbitration”

Matters relevant to characterisation of an arbitration as a “commercial arbitration”

37    The Model Law note addresses the meaning of the word “commercial”, but the ultimate inquiry is whether there would be a “commercial arbitration” to which the NSW Arbitration Act applies.

38    Much time was spent in submissions on the meaning of the Model Law note and whether regard should be had to the nature of the claims giving rise to the dispute between the parties or to the relationship between them. Mr AghaeiRad submitted that one must have regard to the former but not the latter: T227. His submission was that his claims were consumer claims, not “commercial” claims, with the result that the NSW Arbitration Act did not apply.

39    In my view, there is no statutory or other warrant to ignore any circumstance relevant and probative of the characterisation of an arbitration as a “commercial arbitration” or the underlying dispute as a commercial dispute. Whilst the particular significance of one or other factor may vary according to the particular case, the following matters are generally relevant and probative:

(a)    the nature of the claims giving rise to the dispute;

(b)    the nature of the relevant transaction or dealing between the parties giving rise to the dispute;

(c)    the status of, and the relationship between, the parties, including for example whether the transaction giving rise to the dispute was one entered into: in the course of the business of one or more of the parties; by one of the parties as an end consumer; or in the context of a family relationship.

40    As to the matter in (a), an arbitration presupposes a dispute. A dispute presupposes that one party is making a claim against the other. It is accordingly plain that one must look to the nature of the claims to determine whether an arbitration of them would be a “commercial arbitration”.

41    As to the matters in (b) and (c), the relevance of them is supported by the text of the Model Law note on the meaning of “commercial”, which has been incorporated into the NSW Arbitration Act. It states that the term should be given a wide interpretation to cover “all relationships of a commercial nature”. After tying the meaning of the word “commercial” to “all relationships of a commercial nature”, the note provides a list of transactions or activities which are intended to be included in the notion of “relationships of a commercial nature”. The Model Law note thus indicates that both the relationship between the parties and the nature of the transaction are relevant.

42    The relevance of each of the matters in (a) to (c) is also supported by authority. In ASADA v 34 Players and One Support Person [2014] VSC 635 at [11] and [12], Croft J had regard to extrinsic material and referred to academic commentaries in concluding that employment relationships were not “commercial”. His Honour took into account the nature of the claim and the relationship and conduct of the parties as relevant in determining whether the arbitration of an employment dispute would be a “commercial arbitration”: at [52].

43    In Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170; 257 FCR 442 (Allsop CJ, Besanko and O’Callaghan JJ), the Full Court took into account the nature of the claims, the relationship between the parties and the nature of the transactions underlying the dispute. The Full Court observed that the parties were not required to be in a pre-existing commercial relationship for an arbitration to be a “commercial arbitration”, but did not doubt the relevance of that fact if they were: at [117] to [124].

44    The Full Court accepted (at [132]) that the disputes the subject of that proceeding were “quintessentially” commercial, for the following reasons:

(a)    First, Ms Rinehart and Mr Hancock had brought proceedings in a court with commercial law expertise, pleading claims in contract, corporations law, misleading or deceptive conduct, and equity, and the subject matter of the dispute was valuable commercial assets and the income generated by them: at [128].

(b)    Secondly, the relevant conduct the subject of the pleaded case in connection with the settlement deeds was conduct “in trade or commerce” in the sense of having a trading or commercial character: at [129].

(c)    Thirdly, the objective context in which the settlement deeds were entered into bespoke the commercial character of the agreements and the disputes about them: at [130].

(d)    Fourthly, the deeds focus upon quelling disputes as to title so that large scale commercial relations with third parties could be undertaken: at [131].

45    After accepting that the disputes the subject of the proceeding were “quintessentially” commercial, the Full Court continued by further examining the pleaded case, concluding that the dispute was “manifestly” commercial: at [133].

46    The Full Court approached the issue of whether the arbitration was a “commercial arbitration” as one ultimately of characterisation of the nature of the dispute having regard to the relevant circumstances (that is, including the relationship between the parties, the transactions and the claims as pleaded): at [135].

47    As to characterisation of the nature of the dispute, the Full Court noted that that the enquiry is not binary in the sense of involving mutually exclusive categories: that “the dispute [in Rinehart FCAFC] may be seen as a family dispute does not mean that it and the arbitration to resolve it are not to be characterised as commercial”: at [126] and [134].

48    The Supreme Court of Canada concluded that one looks to the nature of the dispute as revealed by the pleadings, rather than making findings of fact about the relationship between the parties, in determining whether the Model Law applies (as relevantly implemented in domestic law): Uber Technologies Inc v Heller [2020] 2 SCR 118 at [24] to [26] (Abella and Rowe JJ, delivering the reasons of the majority). Justice Côté (dissenting on the issue of unconscionability) considered that the nature of the parties’ relationship should be the primary focus of the analysis: at [211] to [215]. These views do not easily reconcile with Australian authorities.

49    In summary, determining whether an arbitration is a “commercial arbitration” involves characterising the nature of the dispute and, within that, the underlying transactions, the relationship between the parties and the nature of the claims are each potentially if not generally relevant.

The relevance of the supply being “in trade or commerce” within the meaning in consumer protection laws

50    Plus500 argued that, because Mr AghaeiRad’s claims against it necessarily involved a contention that Plus500AU’s supplies were “in trade or commerce”, an arbitration of the claims made by him would necessarily be a “commercial arbitration”.

51    In Hancock Prospecting, after concluding at [132] that the disputes the subject of that proceeding were “quintessentially” commercial, the Full Court addressed the fact that a large part of the pleading was founded on express allegations that the misrepresentations and conduct were made “in trade or commerce” within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (TPA) at [136] to [138]. The Full Court noted that, for the applicants’ pleading to disclose a proper cause of action, the pleaded claims which relied on the TPA had to refer to conduct which was an aspect or element of activities or transactions which, of their nature, bore a “commercial character”: at [137]. The Full Court then stated that “[t]his reinforces the conclusion that the dispute is necessarily a ‘commercial dispute’”: at [138].

52    The fact that one party to a transaction is acting “in trade or commerce” for the purposes of the TPA or the Australian Consumer Law (ACL) (contained in Sch 2 to the Competition and Consumer Act 2010 (Cth)) does not of itself supply the answer to the question whether an arbitration of a dispute arising from that transaction with that entity would be a “commercial arbitration”. I do not understand Rinehart FCAFC at [136] to [138] to hold otherwise, although I accept that the Full Court’s use of the word “necessarily” in [138] supplies an argument to the contrary, especially when read with [129]. The Full Court’s anterior conclusion at [132] – that the dispute was “manifestly” commercial – was “reinforced” ([138]) by the fact that a part of the dispute involved an allegation that the relevant conduct was in trade or commerce. It does not follow that all arbitrations of claims which rely on conduct occurring “in trade or commerce” within the meaning of the ACL must necessarily be “commercial arbitrations” on the sole basis that the respondent’s conduct must be “in trade or commerce” for the applicant to succeed.

53    The disappointed consumer of some butter chicken ordered through Uber Eats would be justifiably surprised to learn that a dispute about the dish being unfit for purpose would lead to a “commercial arbitration” because the restaurant was engaged in trade or commerce and its terms of sale contained an arbitration clause requiring the dispute to be arbitrated in the Netherlands.

54    On the other hand, if there was a mandatory arbitration clause in the contract between the restaurant and Uber Eats, a dispute between them over responsibility for the dish’s unsatisfactory state would more readily lead to a “commercial arbitration”, even if the restaurant’s claim was based on a law contained in consumer protection legislation such as the ACL and the restaurant could be described as a “consumer” of Uber Eats’ services.

Characterisation of Mr AghaeiRad’s dispute

55    In my view, an arbitration of Mr AghaeiRad’s claims would be a “commercial arbitration” within the meaning of the NSW Arbitration Act. Mr AghaeiRad’s claims rely in substantial part upon laws which can be described broadly as consumer protection laws. However, commercial disputes and commercial arbitrations routinely involve laws which are consumer protection laws – see: Comandate Marine at [185] and [186]. The breaches relied on by Mr AghaeiRad include breaches of:

(a)    section 1041H of the Corporations Act and s 12DA of the ASIC Act for misleading or deceptive conduct in relation to financial products or services: ASOC at [88] to [92];

(b)    section 1041E of the Corporations Act for false or misleading statements inducing acquisition of financial products: ASOC at [95] to [100];

(c)    section 12DF of the ASIC Act for misleading conduct in relation to the nature, characteristics or suitability for purpose of financial services: ASOC at [103] to [105];

(d)    section 991A of the Corporations Act and s 12CB of the ASIC Act, for engaging in a system or pattern of conduct which was unconscionable: ASOC at [114] to [116].

56    Whilst Mr AghaeiRad is accurately described as a “consumer”, including for the purposes of laws which may appropriately be described as “consumer protection laws”, such as the ASIC Act, the status of a person as a consumer for particular purposes does not insulate a dispute or arbitration involving that person or consumer from being characterised as commercial.

57    Whether a person is a “consumer”, and the significance of a conclusion that the person is a consumer, depends on the reason the question is asked. Whether a person is a “consumer” for the purposes of specific statutes depends on the relevant definition. The significance of the designation is that the consumer protections the subject of the legislation are capable of operating with respect to the person. However, the status of the person as a “consumer” for those laws does not mean, for example, that the transactions entered into by that person as a “consumer” were not commercial transactions, or were not entered into in the context of commercial relationships for the purposes of those or other laws.

58    The Model Law was not drafted with a view to excluding claims made under what might be described as consumer protection laws, less still Australian consumer protection laws as they might stand from time to time.

59    Mr AghaeiRad’s activities on the Plus500 Trading Platform involved substantial sums of money. After he saw an advertisement to the effect that the platform was being used by millions of people to make a return or an income from trading, Mr AghaeiRad began using the Plus500 Trading Platform as an opportunity to make money: AghaeiRad 1 at [28] and [29]. He also traded CFDs online through another publicly available platform: T165. Mr AghaeiRad is a business analyst, with a PhD in Artificial Intelligence from the Universidade de Coimbra, a Master of Computer Software Engineering, and a Bachelor of Applied Mathematics from the Islamic Azad University.

60    Plus500’s marketing and other material characterise its activities as providing participants the opportunity to engage in investment activities. Of course, Mr AghaeiRad contends in the proceedings that, in fact, what the Plus500 Trading Platform offers is little more than a game of chance. Nevertheless, Mr AghaeiRad intended to use the platform to make money, rather than to gamble.

61    Mr AghaeiRad engaged in substantial investment or trading activity on the Plus500 Trading Platform. As noted earlier, one of the example transactions given in the Model Law note in s 1(1) of the NSW Arbitration Act, relevant to an assessment of the meaning of the word “commercial”, is “investment”.

62    Mr AghaeiRad’s claims and activities are distinguishable from many transactions which might readily fit within the meaning of “ordinary consumer claims” or “consumer sales” that those drafting the Model Law apparently intended to exclude. A standard “consumer sale”, such as the purchase of a train ticket, or a light bulb, involves the expenditure of money on goods or services for end consumption with no significant commercial consequence for the consumer. Whether in such consumer sale transactions, the relationship between the vendors and the purchaser would be described as “commercial” would depend on the reason the question is asked. From the perspective of the vendor, the transaction is “commercial”. From the perspective of the consumer, the transaction is one of personal consumption and could only be described as “commercial” in the broadest of senses.

63    Mr AghaeiRad’s activities did not merely involve the expenditure of money on goods or services for end consumption, such as the purchase of a light bulb. Rather, his activities were intended to, and did, have more significant commercial consequences. His activities were intended to lead to profit but led to substantial loss.

64    I note – but have put to one side in reaching my conclusions – that it is possible that Mr AghaeiRad’s activities gave rise to gains and losses which might be taken into account in determining his assessable income, either as income and deductions from business activity or as capital gains and losses on investments. This would not depend on whether he in fact claimed losses in the 2021 financial year. Nor is it determined by the fact that Mr AghaeiRad acquired the CFDs predominantly for personal, domestic or household use within the meaning of s 12BF(3) of the ASIC Act: AS[30]. Whether Mr AghaeiRad’s activities resulted in him being engaged in business depends on the precise characterisation of those activities, the scale and frequency of those activities (not just with Plus500AU), and the methods employed by him in conducting those activities. These questions were not explored in any detail by the parties.

65    Irrespective of whether there were any tax consequences, Mr AghaeiRad was engaged in the relevant “investment” activities to make money. This is quite different to “ordinary consumer” purchases which have no real commercial consequences. Mr AghaeiRad’s investment or trading activities had a “commercial” flavour. They are distinguishable from ordinary “consumer sales”.

66    In my view, if Mr AghaeiRad’s dispute were referred to arbitration, it would be a commercial arbitration having regard to the claims made, the nature of the underlying transactions and the relationship between the parties.

THE MATTER IS THE SUBJECT OF AN “ARBITRATION AGREEMENT”

The issue

67    Mr AghaeiRad contends that s 8(1) of the NSW Arbitration Act does not apply because the dispute before the Court is not the subject of any “arbitration agreement” for two reasons:

(a)    Mr AghaeiRad did not agree to the arbitration term in cl 23.3, such that it did not become a term, or form part, of the contract; and/or

(b)    the subject matter of the proceeding falls outside the arbitration term.

The arbitration term was incorporated in the contract

68    Both Mr AghaeiRad and Plus500 approached the question whether cl 23.3 was incorporated into the agreement between Mr AghaeiRad and Plus500AU by reference to the analysis of Beach J in Dialogue Consulting Pty Ltd v Instagram, Inc [2020] FCA 1846; 291 FCR 155.

69    Justice Beach observed that “what needs to be considered are questions of reasonable notice and manifestation of assent”: at [217]. A person who has actual notice of the existence of a hyperlink to terms of use has notice that is sufficient to place a reasonably prudent person on inquiry such that the person has constructive notice of the contents of the terms because the person would have learned the contents if the inquiry had been pursued: at [231]. If reasonable notice has been given to an offeree that a particular act signifies acceptance of the offer, and the offeree knowingly performs that act, then the offeree has accepted all of the terms of the offer, even if he does not know them all: at [235].

70    On the question as to when assent is manifested, Beach J referred to three methods commonly used on websites to seek to secure agreement: Dialogue Consulting at [242] to [244]; see also Clapperton D and Corones S, “Unfair Terms in ‘Clickwrap’ and other Electronic Contracts” (2007) 35(3) ABLR 152; Blount S, Electronic Contracts (2nd ed, LexisNexis, 2015) pp 111–30. The three categories were:

    Clickwrap contracts, which require a user to click on a dialogue box labelled “I agree” or something equivalent before the user can further use the site’s services: at [243].

    Browsewrap contracts, where the user is notified, without being required to click on an “I agree” button or an equivalent, that by accessing or using the services of the site, they agree to be bound by its terms of service: at [244] to [248].

    Sign-in wrap contracts, where a website notifies users of the terms of use, and makes them available by providing a hyperlink, and requires the user to “sign-in” before proceeding: at [250] to [255].

71    Justice Beach found that the respondent offered a sign-in wrap (at [249]) by providing hyperlinks to the relevant Terms of Use on the initial sign-up screen and requiring its users to confirm at the point of registration that they agreed to the Terms of Use: at [263]. His Honour held that it was enforceable because notice of the existence of the terms was conspicuous, and the terms were easily accessible by hyperlinks: Dialogue Consulting at [267] to [268].

72    The present case involves a form of a “clickwrap” contract. Mr AghaeiRad was required to complete an online registration process before he could access the services provided by Plus500AU. That required him to check a box which confirmed that he “read, understood and agree[d] to” the terms of the hyperlinked documents, including the User Agreement containing the arbitration clause: 1RS[26] to [27]. Objectively assessed in all of the circumstances, the contract between the parties included the whole User Agreement. Mr AghaeiRad’s checking of the box manifested his assent to the User Agreement, and all of the terms within it. Whether the User Agreement included terms which were relevantly unfair is a different question.

73    Against this conclusion, Mr AghaeiRad relied on the decision of Ramsey J in Mylcrist Builders Ltd v Buck [2008] EWHC 2172 at [56], where his Honour concluded that a builder’s arbitration clause, and the effect of the clause, was not sufficiently drawn to the attention of the consumer, Mrs Buck. Mr AghaeiRad relied in particular on the following passage:

… whilst the box signed by Mrs Buck properly drew her attention to the existence of terms, the impact of the arbitration clause would not be apparent to a layperson and was not apparent to Mrs Buck who was not aware of its effect, as her subsequent conduct shows. The requirement of fair and open dealing means that for consumer transactions the arbitration clause and its effect need to be more fully, clearly and prominently set out than it was in this case …

74    Mr AghaeiRad’s reliance on Mylcrist is misplaced. The submission confuses the question of whether the arbitration clause was incorporated into the contract with whether the arbitration clause was unfair. Ramsay J concluded that the arbitration clause formed a part of the contract: at [6]. The issue which Ramsay J was addressing at [56] was whether the arbitration clause was an unfair term under the Unfair Terms in Consumer Contracts Regulations 1999 (UK) with the result that the term would not be binding on the consumer.

75    Mr AghaeiRad also submitted that reasonable notice was not given, with the result that the arbitration term was not incorporated into the contract: AS[38]. Mr AghaeiRad relied upon Buchanan JA’s statement in Maxitherm Boilers Pty Ltd v Pacific Dunlop Ltd [1998] 4 VR 559 at 569, that “the inclusion of an unusual term, at least in an unsigned document, may require its proponent to take special steps to bring it to the attention of the other party, for otherwise it may not be reasonable to assume consent to the term”.

76    As is made clear in Buchanan JA’s statement, signed and unsigned contracts must be distinguished when it comes to the concept of sufficient notice.

77    This was also made clear in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [53] to [57] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). Where a person has signed a document intended to affect legal relations – and there is no question of vitiating factors such as misrepresentation, duress or mistake – the fact that the person has signed the document without reading it does not put the other party in the position of having to show that due notice was given of its terms: Toll at [54]. Where a person has signed a contract knowing it contains contractual terms – and leaving aside vitiating elements and claims for equitable or statutory relief – a person is bound by the terms of the signed document whether or not the person has read the document: Toll at [57].

78    The present case shares some similarities with a person signing a written contract. Mr AghaeiRad’s checking of the box is an objective manifestation of his assent (see also Dialogue Consulting at [235]), similar to a person demonstrating agreement by signing a contract. Objectively assessed, despite Mr AghaeiRad’s subjective ignorance of the arbitration term, the parties intended that the User Agreement comprise the contract between them.

The subject matter of the proceeding is not outside the scope of the arbitration term

79    Mr AghaeiRad submitted that, even if the arbitration term in cl 23.3 was incorporated into the contract with Plus500AU, these proceedings are outside the scope of the term because it could not be said that the dispute is one “arising in connection with” the User Agreement within the meaning of cl 23.1, set out at [4] above.

80    Mr AghaeiRad submitted that:

(a)    the scope of a clause “is to be determined by what a reasonable person in the position of the parties would have understood it to mean, having regard to the text, surrounding circumstances, purpose and object of the transaction”, referring to Comandate Marine at [162], which cites Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ): AS[51];

(b)    a liberal approach is taken to the nature and breadth of relational terms in arbitration agreements between commercial parties, reflecting the presumption that commercial parties did not intend the inconvenience of having possible disputes arising from their dealings being heard in two places: Comandate Marine at [164] to [165], [175] to [176]; AS[54];

(c)    the User Agreement was a “consumer contract” and should be distinguished from a “commercial contract”; and

(d)    a liberal interpretation of relational phrases in an arbitration clause should not be taken in the present case, which involves a standard form consumer contract, where ordinary consumers would not assume that their ability to access a court would be denied: AS[56].

81    I do not accept Mr AghaeiRad’s submissions.

82    The fact that a relational phrase is construed liberally in the context of a contract between two commercial parties does not suggest that a narrow approach should be taken to the interpretation of a relational phrase in a standard form contract between a business and the consumers of its goods or services. The task is simply to determine and give effect to the common intention of the parties ascertained from the words of the contract, by reference to what a reasonable person in the position of the parties would understand from the language through which the parties have expressed their agreement. Here, the relational phrase is broad enough to connect the current dispute with the arbitration term. The phrase “in connection with” is of the broadest kind. A reasonable person in the position of the parties would have understood all disputes with any connection with the User Agreement to be captured by the dispute resolution clause.

THE ARBITRATION TERM IS VOID, INOPERATIVE OR INCAPABLE OF BEING PERFORMED

83    As mentioned earlier, the requirement under s 8(1) of the NSW Arbitration Act to refer proceedings the subject of an arbitration term to arbitration does not apply if the following proviso applies: “the agreement is null and void, inoperative or incapable of being performed”. Mr AghaeiRad submitted that the proviso applies for three reasons:

(a)    the matters the subject of this proceeding are not arbitrable, with the result that the arbitration agreement is inoperative or incapable of being performed;

(b)    the arbitration term is an unfair contract term voided by s 12BF of the ASIC Act; and

(c)    Plus500’s enforcement of the arbitration term would involve statutory unconscionability contrary to s 12CB of the ASIC Act, with the result that it is null and void or inoperative or incapable of being performed.

84    Plus500 contended:

(a)    that:

(i)    even if the matters the subject of this proceeding are not arbitrable, that fact would not be a basis for refusing to grant a stay and refer the matter to arbitration under s 8(1) of the NSW Arbitration Act; but, in any event,

(ii)    the matters the subject of this proceeding are arbitrable;

(b)    the arbitration term is not an unfair contract term voided by s 12BF of the ASIC Act; and

(c)    Plus500’s enforcement of the arbitration term would not involve unconscionability of the statutory kind prohibited by s 12CB of the ASIC Act.

85    For the reasons which follow:

(a)    as to (a):

(i)    if the matters the subject of this proceeding were not arbitrable, relief under s 8(1) of the NSW Arbitration Act – granting a stay and referring the matter to arbitration – would be refused; however,

(ii)    the matters are arbitrable.

(b)    the arbitration term in cl 23.3 falls within the proviso in s 8(1) of the NSW Arbitration Act because it is void under s 12BF of the ASIC Act;

(c)    the arbitration term in cl 23.3 falls within the proviso in s 8(1) of the NSW Arbitration Act because enforcement of it in the circumstances of this case would involve unconscionable conduct contrary to s 12CB of the ASIC Act.

Section 8(1) relief would be refused if the matters were not arbitrable

86    As mentioned, Plus500’s response to the contention that Mr AghaeiRad’s claims are not arbitrable was that: (1) a proceeding does not need to be arbitrable to be required to be referred to arbitration under s 8(1); and (2) in any event, Mr AghaeiRad’s claims are arbitrable.

87    Plus500 submitted that s 8(1) does not require a matter to be “capable of settlement by arbitration” for it to require the Court to grant a stay, because s 8(1) does not contain an equivalent of s 7(2)(b) of the International Arbitration Act: 1RRS[38] to [47].

88    Section 7(2) of the International Arbitration Act contains an express requirement that a matter be “capable of settlement by arbitration” before a Court must grant a stay. It provides:

Enforcement of foreign arbitration agreements

(2)    Subject to this Part, where:

(a)    proceedings instituted by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court; and

(b)    the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration;

on the application of a party to the agreement, the court shall, by order, upon such conditions (if any) as it thinks fit, stay the proceedings or so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter.

89    Although “arbitrability” is not expressly referred to in s 8(1) of the NSW Arbitration Act, a court would not stay a proceeding and refer it to arbitration under s 8(1) if it was not arbitrable in the sense of being “capable of settlement by arbitration”. Section 8(1) of the NSW Arbitration Act is in the same form as Art 8(1) of the Model Law. As mentioned, the NSW Arbitration Act requires regard to be had in its interpretation to the need to promote, so far as practicable, uniformity between its application to domestic commercial arbitration and the application of the Model Law to international commercial arbitration: s 2A(1); Tesseract International Pty Ltd v Pascale Construction Pty Ltd [2024] HCA 24; 418 ALR 539 at [3] (Gageler CJ).

90    The concept of something being capable of settlement by arbitration underlies the Model Law and is expressly referred to in Arts 34(2)(b)(i) and 36(1)(b)(i) of the Model Law and ss 34(2)(b)(i) and 36(1)(b)(i) of the NSW Arbitration Act. Section 34(2)(b)(i) provides that the Court may set aside an arbitral award “if the subject-matter of the dispute is not capable of settlement by arbitration under the law of [NSW]”. Section 36(1)(b)(i) provides that recognition or enforcement of an arbitral award may be refused if the Court finds that “the subject-matter of the dispute is not capable of settlement by arbitration under the law of [NSW]”. If the Court would set aside an award under s 34(2), or refuse to enforce or recognise an award under s 36(1), because the subject matter of the dispute was not capable of settlement by arbitration, the Court would not grant a stay and pointlessly refer the matter to arbitration under s 8(1).

91    The absence of an express statement in s 8(1) of the NSW Arbitration Act of an equivalent to s 7(2)(b) of the International Arbitration Act (which in this respect does not replicate the Model Law) does not bear the significance attributed by Plus500.

92    An agreement to arbitrate a non-arbitrable subject-matter (ss 34(2)(b)(i) and 36(1)(b)(i)) or to conduct an arbitration which is contrary to the public policy of the place of arbitration (ss 34(2)(b)(ii) and 36(1)(b)(ii)) will be one which is, at the least, “incapable of being performed” within the meaning of s 8(1) of the NSW Arbitration Act – see: Tesseract at [338] (Jagot and Beech-Jones JJ); see also: at [46] to [48] (Gageler CJ).

The matters the subject of the proceedings are arbitrable

93    In Tesseract at [341], Jagot and Beech-Jones JJ identified the kinds of disputes which fall into the exceptional category of non-arbitrable subject-matter in the following way:

The types of disputes which fall into the exceptional category of non-arbitrable subject-matter have been identified as including, for example, disputes involving: criminal offences; employment grievances; property settlement; divorce; the custody of children; bankruptcy and insolvency; and certain intellectual property disputes.

94    In the footnote to this sentence (fn 343), their Honours cited WDR Delaware Corp v Hydrox Holdings Pty Ltd [2016] FCA 1164; 245 FCR 452 at [128] (Foster J); Rinehart v Welker [2012] NSWCA 95; 95 NSWLR 221 at [165] (Bathurst CJ) and referred to Born GB, International Commercial Arbitration (1st ed, Kluwer International Law, 2009) vol 1, p 768. The relevant passage in the reasons of Bathurst CJ in Rinehart NSWCA at [165] is as follows (emphasis added):

G Born, in International Commercial Arbitration, vol 1 (2009, The Netherlands, Kluwer Law International) at 768, states the position as follows:

Although the better view is that the Convention imposes limits on Contracting States’ applications of the non-arbitrability doctrine, the types of claims that are non-arbitrable differ from nation to nation. Among other things, classic examples of non-arbitrable subjects include certain disputes concerning consumer claims; criminal offences; labour or employment grievances; intellectual property; and domestic relations.

The types of disputes which are non-arbitrable nonetheless almost always arise from a common set of considerations. The non-arbitrability doctrine rests on the notion that some matters so pervasively involve public rights, or interests of third parties, which are the subjects of uniquely governmental authority, that agreements to resolve such disputes by ‘private’ arbitration should not be given effect.

95    Referring to this passage, Mr AghaeiRad submitted that his claims were non-arbitrable because they fell within the concept “certain disputes concerning consumer claims”. This submission involved three components.

96    First, Mr AghaeiRad submitted that his claims were “ordinary consumer claims”: T242.30–2.

97    For reasons given earlier, I do not accept that the claims are “ordinary consumer claims” of a kind that would not give rise to a “commercial arbitration” or that are non-arbitrable.

98    Secondly, Mr AghaeiRad submitted that his claims involved alleged deception or unconscionable conduct towards the public at large, referring to the claims for breach of s 12DF of the ASIC Act – see: ASOC at [25(b)], [89(d)] (by reference in [103]), [103] to [107] and [109]; T242.26–29.

99    To the extent that Mr AghaeiRad’s claims involve allegations of conduct directed to the public at large, this does not make his claims non-arbitrable. Non-arbitrability generally arises because there is a sufficient element of legitimate public interest in the subject matter of the dispute for it to be inappropriate to resolve the dispute outside the national court system. The identification and control of subject matters bearing that relevant public interest is the legitimate domain of national legislatures and courts: Comandate Marine at [200].

100    It is conceivable that misleading or unconscionable conduct claims may involve deception of the public, as opposed to deception only of the party to the contract, to such an extent that questions of arbitrability arise: Comandate Marine at [186]. Although Mr AghaeiRad’s personal claims involve an allegation that Plus500’s conduct was misleading towards the public at large, such claims are made in pursuit of a private claim for loss and damage. The exercise of a private right to claim loss for misleading conduct directed to a portion of the public, of which Mr AghaeiRad was a member, will not affect third parties in a way which make the claims non-arbitrable. The claims are distinguishable from those which, for example, affect public registers, such as commonly arises in patent and trademark cases (and real property cases). In my view, Mr AghaeiRad’s claims do not involve public interest of a kind which render their enforcement outside the national court system inappropriate.

101    Thirdly, Mr AghaeiRad submitted that the representative claims affect the public at large, including by force of s 33ZB in Pt IVA of the FCA Act, which operates to bind any person who has not opted out of the proceeding under s 33J of the FCA Act: T242.30–1.

102    It is true that a representative proceeding would not be arbitrable, but that is not the point. The question is whether Mr AghaeiRad’s claims are arbitrable, not whether the proceeding as constituted – involving other people’s claims and having various statutory consequences on members of the public falling within the pleaded definition of group member – is arbitrable.

103    Mr AghaeiRad’s (individual) claim against Plus500 is not non-arbitrable.

The arbitration term is “unfair” within the meaning of 12BF of the ASIC Act

Section 12BF applies to void the arbitration term if it is “unfair”

104    Part 2 of the ASIC Act is concerned with “Consumer Protection in relation to Financial Services”. Within Div 2, Subdiv BA addresses “unfair contract terms” and Subdiv C addresses “unconscionable conduct”. Section 12BC contains a deeming provision which, unless a contrary intention appears, exhaustively identifies who is taken to be a “consumer”. The deeming extends to a person who acquires services in connection with a “small business”, a concept defined in s 12BC(2).

105    Section 12BF(1) of the ASIC Act relevantly provides for the voiding of unfair contract terms in the following way:

12BF    Unfair terms of consumer contracts and small business contracts

(1)    A term of a consumer contract or small business contract is void if:

(a)    the term is unfair; and

(b)    the contract is a standard form contract; and

(c)    the contract is:

(i)    a financial product; or

(ii)    a contract for the supply, or possible supply, of services that are financial services.

106    The only dispute between the parties was whether the arbitration term in the User Agreement is “unfair”, such that subs (a) was satisfied. Plus500 did not dispute that the contract was a “consumer contract” in a “standard form” “for the supply, or possibly supply, of services that are financial services”, such that subss (b) and (c) were satisfied.

Three elements must be satisfied for a term to be “unfair”

107    The meaning of “unfair” in s 12BF(1)(a) is supplied by s 12BG, which provides (with apparent typographical error in the paragraph lettering in s 12BG(2)):

12BG    Meaning of unfair

(1)    A term of a contract referred to in section 12BF is unfair if:

(a)    it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and

(b)    it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and

(c)    it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

(2)    In determining whether a term of a contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:

(b)    the extent to which the term is transparent;

(c)    the contract as a whole.

(3)    A term is transparent if the term is:

(a)    expressed in reasonably plain language; and

(b)    legible; and

(c)    presented clearly; and

(d)    readily available to any party affected by the term.

(4)    For the purposes of paragraph (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.

108    Non-exhaustive examples of the kinds of terms of a consumer or small business contract that “may be unfair” are set out in s 12BH. Of particular relevance, s 12BH(1)(k) provides that an example of a term which may be unfair is “a term that limits, or has the effect of limiting, one party’s right to sue another party”.

109    The High Court has considered provisions equivalent to those in Subdiv BA of the ASIC Act, namely those in Pt 2-3 of Ch 2 of the ACL in Karpik v Carnival plc [2023] HCA 39; 280 CLR 640. The relevant principles, adapted to refer to the ASIC Act may be summarised as follows:

(a)    section 12BG(1) contains three components or elements, which must each be satisfied: Karpik at [29].

(b)    the assessment of unfairness must occur by reference to the time at which the contract is entered into, not some later point in time: Karpik at [52].

(c)    as s 12BG(2) states, in determining whether a term of a contract is unfair, a court may take into account such matters as it thinks relevant, but it must take into account (i) the extent to which the term is transparent; and (ii) the contract as a whole.

(d)    as s 12BG(3) states, a term is “transparent” if the term is expressed in reasonably plain language, legible, presented clearly and readily available to any party affected by the term: Karpik at [28].

(e)    the transparency of a term is relevant to “the analysis of the extent to which the term is unfair assessed against each of the elements”: Karpik at [32].

110    As this summary makes clear, the requirement in s 12BG(2) to consider the transparency of an impugned term is not a separate independent inquiry. It informs the analysis of whether the three elements in s 12BG(1) are engaged. For example, the greater the imbalance or detriment inherent in the term, the greater the need for the term to be expressed and presented clearly: Karpik at [32]. It is therefore convenient to address transparency first, as the parties did in their submissions, before addressing the three elements separately. Whilst the three elements are addressed separately, that should not be understood as meaning that there is no interplay between them.

The “transparency” of the arbitration term in cl 23.3

111    A term is “transparent” if the term is: (a) expressed in reasonably plain language; and (b) legible; and (c) presented clearly; and (d) readily available to any party affected by the term: s 12BG(3).

112    As to the matters in (b) and (d), the arbitration term in cl 23.3 (and the User Agreement and cl 23 as a whole) was legible, being in a font of sufficient size to be read easily. It was also readily available (or accessible) through links presented to investors as part of signing up.

113    As to the matters in (a) and (c), the arbitration term in cl 23.3 lacks transparency in the sense of conveying its effect to customers in reasonably plain language or by clear presentation.

114    The User Agreement was one of five documents that were presented to prospective customers for agreement. Clause 23 – clearly headed “DISPUTE RESOLUTION” – begins on the 30th page of the 50-page User Agreement: CBC2838. The content of it was not foreshadowed in the summary page at the commencement of the User Agreement and the table of contents would only assist a customer in locating it if they were to draw the somewhat unlikely inference that it fell within the section titled “General terms relating to our relationship with you”.

115    To the extent that a reasonable customer would read the User Agreement at all, such a customer is likely to digest only those parts of the contract which are emphasised or appear in a summary or earlier in the agreement.

116    If a prospective customer did open and scroll through the User Agreement, the customer’s attention would be drawn to cl 23 as a whole by the heading “DISPUTE RESOLUTION”.

117    Clause 23.1 begins: “Except to the extent that this section 23 is inconsistent with the requirements of any legislative or regulatory regime, the dispute resolution process set out in this section shall apply”. This makes the effect of cl 23 somewhat unclear from the outset. Many consumers would assume that some parts of cl 23 might not apply by reason of inconsistency with an applicable legislative or regulatory regime.

118    The arbitration component of the dispute resolution clause is contained in the third subclause in cl 23 mid-way through a sentence that begins by addressing a different form of dispute resolution, being mediation. The arbitration component of the clause would have been significantly clearer had it been addressed separately.

119    Plus500AU submitted that a reasonable investor who read the clause would readily appreciate that it requires disputes not otherwise resolved to be submitted to arbitration, not the courts, and that any such investor who is aware of representative proceedings would readily understand that such proceedings are court proceedings, and so the arbitration agreement prevents them from being brought: T208.

120    That may be true of some of Plus500’s customers. It was not true of Mr AghaeiRad and would not have been true of many, probably most, customers. Plus500’s submission proceeds on unrealistic assumptions about the commercial or legal knowledge of relevant customers. The second part of cl 23.3 is plain that a matter is referred to arbitration in the circumstances identified, but it is silent on the significant practical effects of this. Clause 23.3 does not state that there will be any impact on the customer’s right to access a court or participate in a class action. Many, if not most, customers would not have appreciated that this was the effect of cl 23.3. The arbitration term states what it achieves directly, but is silent on its significant indirect achievements.

121    Further, cl 23.1 – which contemplates that parts of cl 23 might be inconsistent with the requirements of some legislative or regulatory regimes – adds to the likelihood that many customers would not have appreciated what cl 23.3 does not expressly or clearly state, namely that one part of cl 23.3 has the effect of preventing them from bringing court proceedings or participating in a class action.

122    The User Agreement would have been considerably clearer if it expressly stated that it excluded bringing representative proceedings or any other legal proceeding.

123    Plus500 submitted that cl 23 was a dispute resolution clause of a type and structure frequently seen in commercial contracts and that the arbitration component was relevantly consistent with the terms of the Resolution Institute model arbitration clause: 1RS[66] and [102]; 1RRS[59].

124    The evidence did not establish that the arbitration term was of a type and structure frequently seen in contracts of a kind analogous to the User Agreement. In any event, even if that matter had been established, that does not make cl 23, or the arbitration term in cl 23.3, transparent. It was not.

First element: mandatory arbitration causes a “significant imbalance” in the parties’ rights under the contract

General principles

125    The first element requires the Court to consider whether the identified term “would cause a significant imbalance in the parties’ rights and obligations arising under the contract” within the meaning of s 12BG(1)(a). The following observations may be made about the first element:

(a)    it is for the claimant to prove that the term would cause a significant imbalance in the parties’ rights and obligations under the contract: Karpik at [29].

(b)    the first element is concerned with the terms of the contract and the effect of those terms, not with questions of how the contract was negotiated or concluded: Australian Securities and Investments Commission v Auto & General Insurance Co Ltd [2025] FCAFC 76; 309 FCR 473 at [31] (O’Bryan and Cheeseman JJ, Derrington J agreeing).

(c)    a significant imbalance may be shown if the balance of the parties’ rights and obligations under the contract are tilted significantly in the supplier’s favour or against the consumer: Auto & General Insurance at [31].

(d)    an imbalance may be “significant” for qualitative or quantitative reasons, and for a combination of reasons – see, for example: Jetstar Airways Pty Ltd v Free [2008] VSC 539; 30 VAR 295 at [104] to [105]; Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377; ATPR ¶42–517 at [54(e)].

(e)    a significant imbalance might be shown by pointing to contractual benefits (including beneficial options, discretions or powers) given to the supplier, or contractual detriments borne by the consumer: Auto & General Insurance at [31]; Dialogue Consulting at [344].

Plus500’s “symmetry” and “detriment” arguments

126    At its core, Plus500’s submission was that cl 23.3 was symmetrical, in the sense that it applied equally to both parties, and that, therefore, there was no imbalance.

127    Plus500 submitted that s 12BG(1)(a) “is directed to the effect of the clause on the balance of the party’s rights and obligations under the relevant contract – here, the User Agreement – not to whether the clause has any detrimental or adverse practical effect on one party or the other in any more general sense”: T193.25–9; T194.34–6. Plus500 relied in this regard on the reasoning of Beach J in Dialogue Consulting at [343] to [346], in which his Honour observed that the arbitration term the subject of that case was symmetrical rather than asymmetrical, and that, once invoked, both parties would obtain the benefits and would be bound by the obligations of the arbitration term. The arbitration term gave both parties an equal right to refer a dispute to arbitration.

128    Plus500 submitted that Beach J’s focus was “on the effect of the term on the balance of the party’s rights and obligations under the contract”, not the detrimental practical effect of the clause itself, and that “what was critical to his Honour’s reasoning … was the symmetry in the arbitration clause”: T194.34–6.

129    Plus500 submitted that the clause in this case was equally symmetrical and sought to distinguish it from the expressly asymmetrical clause in Karpik.

130    In Karpik, the relevant clause was cl 15(C): at [53]. The chapeau to cl 15 made the clause expressly asymmetric, stating that the “provisions [of cl 15] are for the benefit of the Carrier and certain third party beneficiaries”: at [14]. Clause 15B(i) gave exclusive jurisdiction to the United States District Courts for the Central District of California in Los Angeles: at [15]. Clause 15(C) provided for “the exclusive resolution of disputes through individual legal action on your own behalf instead of through any class or representative action, even if the applicable law provides otherwise”: at [16].

131    The High Court held that cl 15(C) caused a significant imbalance “on its face”: at [53]. The High Court observed at [53] that:

    the whole of cl 15 was, on its face, “for the benefit of the Carrier and certain third party beneficiaries” and not the customer;

    the critical term, cl 15(C), was “particularly one-way in its terms because it operate[d] to impose limitations on passengers but in no way restrict[ed] the options of the carrier”; and

    even “without the class action waiver clause [in cl 15(C)], there [was] already an imbalance as between Princess and Mr Ho concerning vindication of their respective rights under the contract, in that there [were] various other limits in cl 15 upon the consumer but not upon Princess”.

132    The High Court then looked at the effect of the clause: at [54]. The High Court stated that, although the class action waiver clause did not impede or affect the existence of a passenger’s individual right to sue, it nevertheless “had the effect of preventing or discouraging passengers from vindicating their legal rights where the cost to do so individually was or may be uneconomical”: at [54].

133    Plus500 submitted that the reasoning in [54] should not be understood as substituting for the requirement of significant imbalance (the subject of the first element in s 12BG), “a test of whether the term has some detrimental or adverse effect on one party to the contract” (the subject of the third element): T192.31–2. It submitted that the High Court was “simply explaining why [the fact that cl 15(C) did not impede Mr Ho’s capacity to sue as an individual] was no answer to the significant imbalance which the Court had identified in paragraph 53 and which was apparent from the asymmetrical nature of the class action waiver clause”: T197.32‍⁠⁠⁠⁠–‍⁠⁠⁠⁠⁠⁠⁠⁠⁠5. According to Plus500, this was how Karpik at [54] was to be read consistently with [53] and with the distinction between the first and third elements in the definition of “unfair” in s 12BG(1): T194.38–40.

134    The issue raised by Plus500 involves the question whether a clause which is symmetrical, in the sense that it applies equally to both parties, can – to adopt the language of s 12BG(1)(a) – “cause a significant imbalance in the parties’ rights and obligations arising under the contract”.

135    The express focus of s 12BG(1)(a) is on whether a term “would cause a significant imbalance in the parties’ rights and obligations arising under the contract”, not whether a clause applies to both parties. Section 12BG(1)(a) invites an examination of whether the impugned term “would cause” an imbalance to assess whether the paragraph is satisfied.

136    Subdiv BA of Div 2 of Pt 2 of the ASIC Act is consumer protection legislation and should be understood in that context. Having regard to that context and the reasoning of the High Court in Karpik at [54], a contractual term which is “symmetrical”, in the sense that it applies to both parties, is capable of “causing” a significant imbalance in the parties’ rights and obligations arising under the contract by reason of the effect the clause has on other rights and obligations individually or as a whole.

137    As is reflected in many of the examples of unfair terms in s 12BH(1), a contractual term which operates only with respect to one party may provide an example of an unfair term, but s 12BG(1)(a) does not require that a term apply only to one party to be “unfair”.

138    A “symmetrical” term (one that applies equally to both parties on its face) may have an asymmetric effect on the parties’ rights and obligations and thus “cause” (s 12BG(1)(a)) an imbalance in rights and obligations. It is unlikely that the legislature intended to leave out of the scope of the unfair contract provision all terms which were symmetrical in their application to the parties, but which had asymmetrical effect.

139    In my view, neither s 24(1)(a) of the ACL, nor s 12BG(1)(a) of the ASIC Act, can be bypassed on the basis that a clause has strict equal or symmetric application to the contracting parties. If that were the case, then a clause in a standard form contract requiring the vendor and a consumer of low value goods to arbitrate claims only in a distant foreign jurisdiction convenient to the vendor could not satisfy the criterion that the term “would cause a significant imbalance in the parties’ rights and obligations arising under the contract” because the vendor (who would never be interested in suing the customer) must also arbitrate in that location. The practical effect of such a clause would be that no rational consumer would ever arbitrate, and the seller would never be held to account. Neither the language nor context of s 12BG(1)(a) suggests it should be so narrowly construed. This conclusion is reinforced by the example in s 12BH(1)(k) referred to earlier of a term which might be unfair, namely “a term that limits, or has the effect of limiting, one party’s right to sue another party” (emphasis added).

140    Contrary to Plus500’s submission, it is permissible to consider the comparative effect of a term which, on its face, applies to both parties, in determining whether there is a “substantial imbalance” for the purposes of s 12BG(1)(a).

141    The second issue raised by Plus500 concerns the distinction between the first and third elements in s 12BG(1).

142    Contrary to Plus500’s submission, the fact that the effect of the term might be labelled “detrimental” – in the sense that it would cause a significant imbalance in one parties’ rights and obligations arising under the contract compared to the other – does not mean that the consequences can only be considered with respect to s 12BG(1)(c) (the third element) and not in the analysis required by s 12BG(1)(a) (the first element).

143    Whilst the third element requires detriment to a party if the impugned term were applied or relied on, that does not mean detrimental effect is irrelevant to whether the impugned term would cause a substantial imbalance in the required way. The substantial imbalance might lie in the uneven or imbalanced detriment caused by a clause which is, on its face, equally applicable to all contracting parties. Whether a term causes “significant imbalance” in the respective rights and obligations of the parties invites a comparison of the relative effect of the term on the parties’ contractual positions.

144    Many aspects of the statutory scheme are interrelated. As mentioned earlier, the question of transparency is interrelated with the three elements of s 12BG(1): Karpik at [32]. What is reasonably necessary to protect Plus500’s legitimate interests (the second element) cannot generally be considered independently of questions of detriment (the third element): Karpik at [30]. Each of subss (a), (b) and (c) of s 12BG focus on one particular matter – imbalance, reasonable protection of legitimate interests and detriment – but the concern of the provision is with substantive unfairness. Speaking broadly, the considerations which are relevant to one paragraph may also be relevant to another. For at least some contractual terms, it would be artificial to assess substantial imbalance without also examining the second and third elements. The provisions must be read, understood and applied as a whole.

The arbitration terms would cause a significant imbalance

145    Whether the arbitration term causes a significant imbalance must be assessed in the context of the whole of the contractual arrangements between the parties.

146    In my view, the arbitration component of cl 23.3 “would cause a significant imbalance in the parties’ rights and obligations arising under the contract” because, assessed at the time the contract was entered into:

(a)    the effect of cl 23.3 would be to prevent Mr AghaeiRad (or any customer) from having recourse to a court;

(b)    the availability of arbitration is theoretical only for Mr AghaeiRad (and most other customers) because of the cost of arbitration relative to the (likely) value of a claim; and

(c)    the effect of cl 23.3 is to prevent Mr AghaeiRad (or any customer) from bringing, or participating in, a class action.

147    These circumstances are similar to those considered in Karpik in the context of the substantial imbalance caused by the clause there in issue. In examining the first element (s 12BG(1)(a)) the High Court stated at [54]:

It can be accepted that the class action waiver clause did not impede or affect the existence of Mr Ho’s individual right to sue, or his capacity to exercise that right. But the class action waiver clause had the effect of preventing or discouraging passengers from vindicating their legal rights where the cost to do so individually was or may be uneconomical. Mr Ho paid a ticket price of CAD1,796.17 for the voyage. The cost of commencing and prosecuting a typical claim arising out of the 13-day cruise holiday, brought as an individual proceeding, may well not be economically viable. This is so regardless of the individual circumstances of Mr Ho and the nature of his particular claims. The relevant inquiry in s 24(1)(a) is whether the term “would cause a significant imbalance in the parties’ rights and obligations arising under the contract” (being a standard form contract), not whether a particular party is personally able to cope with such an imbalance. And the answer is that it did.

148    In amplification of the matters in (a) to (c) above:

    A large proportion of the claims made against Plus500 would be for relatively small amounts, likely only a few thousand dollars. Non-professional investors were allowed to deposit as little as AUD100 into their trading account (CBC2696); two random samples of the complaints received were described by Plus500 as typically for “relatively small amounts of money” (1RS[79]; CBC7272–7); and Plus500 Ltd’s 2019 Annual Report disclosed an average deposit per active customer of USD5,116 in FY2019 and USD4,284 in FY2018: CBC846. It would be uneconomic for small value claims to be prosecuted by arbitration.

    Plus500, on the other hand, would be unlikely ever to make a claim against a consumer using its platform. Indeed, the evidence did not suggest that such a claim had ever been made. Under the User Agreement, consumers are required to ensure that the amount in their account, in terms of cash or other positive positions, exceeds their negative positions: cll 14.1, 14.2 and 18.1; CBC2824–5 and 2832. Plus500 has various powers to ensure that result, including powers to: make margin calls; immediately and without notice close any or all open transactions if an equal or negative overall position is reached; automatically deduct funds from customer accounts; cancel pending withdrawal requests to cover losses; and suspend trading on volatile instruments: cll 14.1, 14.2, 14.3, 18.1, 19.3, 19.4 and 19.13; CBC2824–5, 2832 and 2834–6. Plus500 also has powers to void transactions containing or based on manifest error and to freeze and deduct funds from accounts in breach of certain terms of the User Agreement: cll 15.4 and 15.16; CBC2826 and 2829.

    Whilst the practical effect of the clause was to prevent Plus500’s customers from bringing, or participating in, representative proceedings, Plus500 would obviously never have cause to bring such a proceeding against a customer.

149    Plus500 submitted that, by reason of the alternative dispute resolution mechanisms (including AFCA), there is “no significant imbalance … because the clause does not deny the applicant access to justice or mandate some inferior level of justice”: T198.2–21.

150    Clause 23.1 requires the parties to use reasonable endeavours to resolve any dispute. If the parties fail to resolve the dispute within five days of notice of the dispute, then either party can refer the dispute to the parties’ Senior Officers (where applicable) who are to cooperate in good faith to resolve the dispute within ten days: cl 23.2. Either party can then require mediation: cl 23.3. If the dispute does not settle within 30 days of referral to mediation, then the dispute is referred to arbitration: cl 23.3. Clause 23 does not limit a customer’s right to take a dispute to an external dispute resolution scheme of which Plus500 is a member (cl 23.4) and, accordingly, customers have access to AFCA’s complaints process (as required by law).

151    The availability of those mechanisms may ameliorate the imbalance, but the requirement for arbitration in cl 23.3 causes a significant imbalance in the parties’ rights and obligations arising under the contract because its effect is: (a) to preclude recourse to a court, including through representative proceedings; (b) to provide for arbitration as the form of external dispute resolution in circumstances where Mr AghaeiRad (and other customers) are unlikely to seek arbitration.

152    An arbitrator would charge fees on an hourly basis, fixed by agreement or by the Resolution Institute: r 41(3); CBC2243; Morrison 1 at [167]; CBB206; T127.20–3. That hourly rate would be around AU$500 per hour: Morrison 1 at [201]–[202]; CBB212–3; Horrigan 2 at [73]; CBB78. Even assuming the arbitrator performs relatively little work (which would be unlikely if the claims involved claims of the kind involved in this proceeding), his or her fees would far exceed any that might be incurred in the small claims division of a local court. When combined with the arbitrator’s power to require the parties to deposit an amount in advance as security for his or her fees or expenses (r 43(1); CBC2243), an arbitration is likely to pose an insurmountable obstacle for many consumers wishing to prosecute small value claims. As I have noted later in these reasons, I do not accept that a litigation funder would fund an arbitration of individual claims.

153    Plus500 did not give an example of any case against it going to arbitration.

154    As to the AFCA scheme (and as expanded upon at [211] and [212] below), this scheme is expressly structured on the basis that a party referring a complaint is not bound by AFCA’s determination and can take the matter to court. Its processes and procedures are designed on that basis to provide low cost and quick determinations, usually “on the papers”.

155    It may be accepted that cl 23.3 is “symmetrical” in the sense that it applies equally to both the applicant and Plus500. Nevertheless, the arbitration component of clause 23.3 is weighted heavily in Plus500’s favour, because – in the event of dispute – the arbitration term is likely only to operate adversely to Mr AghaeiRad (and customers generally) and favourably to Plus500. It operates to the substantial benefit of Plus500 by furnishing it with a mechanism to prevent Mr AghaeiRad seeking redress in a court, whether in an individual action or a representative proceeding. It has the practical effect of preventing or discouraging Mr AghaeiRad from vindicating his rights otherwise than through attempted settlement, mediation or AFCA. It provides for arbitration in circumstances where Mr AghaeiRad is unlikely ever to arbitrate.

Mr AghaeiRad’s further argument concerning cl 39

156    Mr AghaeiRad made a further argument regarding significant imbalance, which involved cl 39. Clause 39 provides (CBC2849–50):

39.    GOVERNING LAW AND JURISDICTION

39.1    The interpretation, construction, effect and enforceability of the Client Agreements shall be governed by the law of the State of New South Wales, Australia. You agree all Transactions carried out on the Trading Platform are governed by the law of the State of New South Wales, Australia, regardless of your location.

39.2    You agree to irrevocably submit to the non-exclusive jurisdiction of the courts of the State of New South Wales, Australia. We reserve the right to commence proceedings in any court of competent jurisdiction.

157    Mr AghaeiRad argued that the arbitration term was imbalanced for the further reason that the second sentence of cl 39.2 had the effect that cl 23.3 did not apply to Plus500 if it wished to commence proceedings in a court: AS[84].

158    Plus500 submitted that the second sentence of cl 39.2 did not qualify cl 23.3 in any way and was merely intended to prevent investors complaining if Plus500AU sued in a court of competent jurisdiction other than a NSW court: 1RRS[71] to [72]. It submitted that it was not surprising that the User Agreement contemplated that some disputes may involve proceedings being carried on in a court: 1RRS[73]. For example, the various State Supreme Courts would have a role to play in quelling disputes about the appointment of an arbitrator, in resolving procedural challenges, or in terminating an arbitrator’s mandate under s 14 of the NSW Arbitration Act – see also: ss 11 and 13.

159    It is true that cl 23.3 does not state that it is subject to cl 39. Equally, however, cl 39.2 does not state that it is subject to cl 23.3. It is also true that State Supreme Courts would have a role to play in the ways identified by Plus500, but so much necessarily follows from the fact that cl 23.3 contemplates arbitration. The second sentence in cl 39.2 appears to reserve the right to commence any proceedings, not proceedings concerned with an arbitration under cl 23.3.

160    The arbitration component of cl 23.3 “would cause a significant imbalance in the parties’ rights and obligations arising under the contract” irrespective of whether cl 39.2 operated in the manner contended by Mr AghaeiRad. It is therefore unnecessary to decide whether cl 39.2 reserved to Plus500 the right to commence court proceedings instead of arbitration.

161    If Mr AghaeiRad’s construction is correct, then his argument in respect of s 12BG(1)(a) is all the stronger.

Second element: arbitration not reasonably necessary to protect legitimate interests

162    The next issue is whether Plus500AU has established that the arbitration term in cl 23.3 was “reasonably necessary in order to protect [its] legitimate interests”.

163    A term of a consumer contract is presumed not to be reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise: Karpik at [30]. The High Court referred to the relevant Explanatory Memorandum, which stated that it was for “the respondent to establish, at the very least, that its legitimate interest is sufficiently compelling on the balance of probabilities to overcome any detriment caused to the consumer, or a class of consumers, and that therefore the term was ‘reasonably necessary’”: Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) at 64 [5.28].

164    Plus500AU submitted that cl 23 as a whole protected its legitimate interest in having a dispute resolution process that (1RS[71]):

(a)    enabled it to comply with its obligations as an AFSL holder: 1RS[72] to [77];

(b)    facilitated the final, fair, efficient and cost-effective resolution of the types of complaints that it typically received: 1RS[78] to [82]; and

(c)    provided for a common procedure and a common forum for the resolution of disputes between it and each of its customers: 1RS[93] to [96].

165    Before turning to those submissions, it is necessary to observe that, whilst cl 23 as a whole is relevant, as is the whole contract, the critical issue raised by 12BG(1)(b) is whether the arbitration term in cl 23.3 is “reasonably necessary”.

166    Plus500’s submissions tended to avoid focus on the arbitration term in cl 23.3 in favour of seeking to emphasise a contended reasonableness of other components of cl 23. This avoids direct engagement with the critical issue.

Obligations as an AFSL holder

167    Plus500 observed that, as the holder of an AFSL, it was required by s 912A(1)(g) of the Corporations Act to have a “dispute resolution system” that complied with s 912A(2).

168    Section 912A(2) required an “internal dispute resolution procedure” covering complaints by retail clients (compliant with ASIC approved standards and requirements) and membership of the AFCA scheme. The relevant standards and requirements were set out in ASIC’s Regulatory Guide 165: Licensing: Internal and External Dispute Resolution as it stood from time to time.

169    It was not suggested that Plus500AU’s “dispute resolution system” did not comply with s 912A(2). Clause 23 provided an “internal dispute resolution system” and Plus500AU was a member of the AFCA scheme. This aspect of cl 23 was reasonable.

170    However, the issue is whether the external dispute resolution procedure of arbitration – which carried the corollary that consumers could not bring court proceedings, including representative proceedings – was reasonably necessary to protect Plus500AU’s legitimate interests. As is further explained below, it was not.

The final, fair, efficient and cost-effective resolution of typical complaints

171    The availability of internal dispute resolution (IDR), mediation and the AFCA scheme were not suggested to be other than generally fair, efficient and cost effective as methods for the resolution of disputes.

172    However, the automatic contractual referral to commercial arbitration, conducted in accordance with the Resolution Institute Arbitration Rules, was not reasonably necessary to protect Plus500AU’s legitimate interest in facilitating final, fair, efficient, confidential and cost-effective resolution of complaints of the type typically received by Plus500AU: 1RS[91]. An arbitration would be confidential, and Plus500AU no doubt had an interest in claims against it being kept confidential, but the real vice is that the arbitration term did not provide for the fair resolution of a typical complaint because no consumer would avail themselves of an arbitration.

173    Between 1 September 2017 and 31 March 2021, Plus500AU received 566 complaints through its website: Bolster 1 at [76] to [78]; CBC609. Of these, 277 were resolved by Plus500AU through internal dispute resolution and 289 (or 51.06%) were escalated to and resolved by AFCA. There was no evidence that any complaint went to commercial arbitration. So far as the evidence disclosed, the mandatory arbitration term in cl 23.3 was not necessary to ensure complaints that were not resolved by IDR, by mediation or by AFCA could be resolved in a fair and efficient manner. To the contrary, the arbitration term in cl 23.3 operated to ensure disputes were not further pursued by customers left dissatisfied at the end of internal dispute resolution, mediation or the AFCA process. That there were customers left dissatisfied at the end of these processes is established by the existence of this representative proceeding and the representative proceeding which has been stayed (see [7] above).

Common procedure and common forum for the resolution of disputes

174    Plus500’s submission that cl 23.3 protects its interest in a common procedure and forum applying to consumer disputes is artificial absent the likelihood of there ever being an arbitration of a dispute. As mentioned, so far as the evidence disclosed, the practical operation of the arbitration term was to prevent disputes being resolved in any external forum other than AFCA. No dispute has been arbitrated and – apart from the present proceeding and a competing representative proceeding – the evidence did not establish that any court proceeding has been commenced.

175    A legitimate interest in having disputes resolved in a common forum is not reasonably protected by choosing a forum which is so unattractive in the context of the likely monetary value of the dispute that a customer would not take the dispute to the forum.

176    In any event, any interest in disputes being resolved by a common procedure in a common forum could be achieved by other reasonable means, including by an exclusive jurisdiction clause.

177    Even if that were not the case, cl 23.3 does not effectively ensure common forum or procedure. As to common forum, given that Plus500AU’s customers were also in New Zealand and South Africa, the seat of any arbitration might vary: Dreyer at [27] and [31]; CBC1367, 1430 and 6800–801; Morrison at [398] to [407]. As to common procedure, arbitration procedures are flexible and variable, such that the procedure in fact adopted in any (theoretical) arbitration would vary.

Conclusion on second element

178    The effect of the arbitration term in cl 23.3 is to prevent a customer from instituting court proceedings which would not be stayed. A customer with a small claim, say one or two thousand dollars, could not bring a claim in a small claims division of a local court. Such a customer could not bring a class action. Any interest Plus500AU has in claims being brought in a common forum and with a common procedure is not, whether individually or in combination with the first and second asserted justifications, “sufficiently compelling to overcome the detriment” of effectively precluding all customers from bringing individual claims or class action proceedings: Karpik at [30].

179    Plus500AU has failed to prove that the mandatory arbitration term in cl 23.3 is reasonably necessary to protect its legitimate interests.

Third element: mandatory arbitration causes detriment

180    The third issue is whether Mr AghaeiRad has established that cl 23.3 “would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on”: s 12BG(1)(c).

181    There is no real question that this requirement is satisfied. If the arbitration component of cl 23.3 applies or is relied upon by Plus500AU, Mr AghaeiRad will be deprived of the ability to prosecute his claim in an appropriate court and further, will be deprived of the various advantages of class action procedures – as to which, see: Karpik at [57].

182    Plus500AU’s internal dispute resolution procedures, the availability of the AFCA scheme and the prospect of an individual or consolidated arbitration do not eliminate the detriment.

Conclusion

183    In my view, the arbitration term is unfair under s 12BF(1) within the meaning of s 12BG(1). It follows from this conclusion that relief under s 8(1) of the NSW Arbitration Act must be refused.

Enforcement of the arbitration term is unconscionable under s 12CB of the ASIC Act

184    Mr AghaeiRad submitted that the arbitration term is “inoperative or incapable of being performed” for the purposes of s 8(1) of the NSW Arbitration Act, because enforcement of the arbitration term by Plus500 amounts to unconscionable conduct within the meaning of s 12CB of the ASIC Act: AS[141].

The statutory regime

185    Section 12CA provides:

12CA    Unconscionable conduct within the meaning of the unwritten law of the States and Territories

(1)    A person must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.

(2)    This section does not apply to conduct that is prohibited by section 12CB.

186    Section 12CB provides:

12CB    Unconscionable conduct in connection with financial services

(1)    A person must not, in trade or commerce, in connection with:

(a)    the supply or possible supply of financial services to a person; or

(b)    the acquisition or possible acquisition of financial services from a person;

engage in conduct that is, in all the circumstances, unconscionable.

(2)    This section does not apply to conduct that is engaged in only because the person engaging in the conduct:

(a)    institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or

(b)    refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.

(3)    For the purpose of determining whether a person has contravened subsection (1):

(a)    the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and

(b)    the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(4)    It is the intention of the Parliament that:

(a)    this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and

(b)    this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and

(c)    in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:

(i)    the terms of the contract; and

(ii)    the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.

187    Section 12CC(1) of the ASIC Act contains a non-exhaustive list of matters to which regard may be had for the purpose of determining whether a supplier has contravened s 12CB. Section 12CC(1) provides:

12CC    Matters the court may have regard to for the purposes of section 12CB

(1)    Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 12CB in connection with the supply or possible supply of financial services to a person (the service recipient), the court may have regard to:

(a)    the relative strengths of the bargaining positions of the supplier and the service recipient; and

(b)    whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and

(c)    whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and

(d)    whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and

(e)    the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and

(f)    the extent to which the supplier’s conduct towards the service recipient was consistent with the supplier’s conduct in similar transactions between the supplier and other like service recipients; and

(g)    if the supplier is a corporation—the requirements of any applicable industry code (see subsection (3)); and

(h)    the requirements of any other industry code (see subsection (3)), if the service recipient acted on the reasonable belief that the supplier would comply with that code; and

(i)    the extent to which the supplier unreasonably failed to disclose to the service recipient:

(i)    any intended conduct of the supplier that might affect the interests of the service recipient; and

(ii)    any risks to the service recipient arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and

(j)    if there is a contract between the supplier and the service recipient for the supply of the financial services:

(i)    the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and

(ii)    the terms and conditions of the contract; and

(iii)    the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and

(iv)    any conduct that the supplier or the service recipient engaged in, in connection with their commercial relationship, after they entered into the contract; and

(k)    without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and

(l)    the extent to which the supplier and the service recipient acted in good faith.

188    These provisions, or their analogs in the ACL, have been considered in numerous cases including: Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liq) (No 3) [2020] FCA 208; 275 FCR 57 at [361] to [379] (Beach J); Australian Securities and Investments Commission v Westpac Banking Corp (Omnibus) [2022] FCA 515; 407 ALR 1 at [21] to [33] (Beach J); AHG WA (2015) Pty Ltd and Others v Mercedes-Benz Australia/Pacific Pty Ltd [2023] FCA 1022; 303 FCR 479 at [3496] to [3530] (Beach J), approved in AHG WA (2015) Pty Ltd v Mercedes-Benz Australia/Pacific Pty Ltd [2025] FCAFC 86; 310 FCR 1 at [142] (Moshinsky, Bromwich and Anderson JJ); Australian Securities and Investments Commission v Union Standard International Group Pty Ltd (No 4) [2024] FCA 1481 (USG) at [1202] to [1217] (Wigney J) and the cases referred to in those decisions.

189    Key points relevant to the present case include that:

(a)    The statutory prohibition of unconscionable conduct is not confined to conduct that is unconscionable within the meaning of the general law: AGM Markets at [362]; AHG at [3497] to [3498]; USG at [1204]; Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 267 CLR 1 at [295] (Edelman J). That is made clear by s 12CA. It follows that:

(i)    whilst the contravener’s subjective state of mind is relevant, statutory unconscionability does not necessarily depend upon such an evaluation: AGM Markets at [373];

(ii)    whilst the personal circumstances of those affected by the conduct are relevant, statutory unconscionability does not necessarily depend upon the contravener taking advantage of a disability, vulnerability, or disadvantage of the affected person: AGM Markets at [377]; AHG at [3516]; USG at [1211]; Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; 285 FCR 133 at [84], [85] and [91].

(b)    Section 12CB prescribes a normative standard of conduct. The implicit “conscience” which s 12CB addresses is a creature of statute, with its construct of values and standards being informed by the explicit and implicit values and standards enshrined in the text, context and purpose of the ASIC Act: AGM Markets at [365] and [367]; AHG at [3503]; Kobelt at [14], [47] (Kiefel CJ and Bell J) and [234] (Nettle and Gordon JJ). The boundaries and content of any relevant and applicable statutory regime beyond the ASIC Act will also be important context where relevant: AGM Markets at [376]; AHG at [3515]. The statutory prohibition under s 12CB involves a broad evaluation of the alleged contravener’s conduct, which – in addition to examining the alleged wrongdoer’s or its officers’ or employees’ state of mind – involves a broader objective evaluation of behaviour including the causes and reasons for such behaviour and its effect or likely effect: AGM Markets at [373]; AHG at [3513].

(c)    Section 12CC provides a non-exhaustive list of matters to which the Court “may” have regard in determining whether conduct is against the statutory construct of conscience. The word “may” is conditional rather than permissive; if any matter in the list is potentially relevant to the conduct under consideration, it must be considered: Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; 258 CLR 525 at [189] (Gageler J). Further, it is necessary to evaluate the conduct in light of all of the circumstances, not just those in s 12CC – see: AGM Markets at [363]; AHG at [3499]; USG at [1205]; Kobelt at [87]. It is not appropriate to focus on one or more of the applicable matters listed in s 12CC(1) to the exclusion or unjustifiable expense of others: AGM Markets at [378]; AHG at [3518]. It was observed in AGM Markets at [371] (referring to Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; 236 FCR 199 at [259] to [306]) that:

(i)    fairness and equality are values and conceptions underpinning s 12CC(1)(a), (b), (d) to (f) and (i) to (k); more particularly, s 12CC(1)(a), (j)(i) and (k) recognise asymmetry of power;

(ii)    a lack of understanding or ignorance of a party is the conception underpinning s 12CC(1)(c);

(iii)    the risk and worth of the bargain are the conceptions underpinning s 12CC(1)(e) and (i); a broader and related although not explicit concept is the question of asymmetry of information; and

(iv)    good faith and fair dealing are values and conceptions underpinning s 12CC(1)(l).

(d)    The essential task is to determine whether the conduct is so outside the norms of commercial behaviour, as explicitly and implicitly found in the ASIC Act, as to warrant being held to be against the statutory conception of conscience contemplated by s 12CB: AHG at [3507]; USG at [1209].

(e)    In determining acceptable commercial behaviour:

(i)    identifying the industry practice and the consistency of the conduct with that practice will be relevant even if the practice is not formalised in an industry code and expressly relevant under s 12CC(1)(g) to (h): AGM Markets at [374]; USG at [1210];

(ii)    although honesty and fairness in dealing with consumers is relevant, including acting without deception, it is wrong to say that unfair conduct in and of itself amounts to unconscionable conduct: AGM Markets at [372];

(iii)    unconscionability may be established even where there has been good faith conduct and, conversely, bad faith conduct may not be sufficient to establish unconscionability, good faith being only one matter under s 12CC(1) out of twelve relevant matters: AHG at [3519].

(iv)    it must be recognised that the pursuit by those engaged in commerce of their own advantage, and in pursuit of their own legitimate interest, is an omnipresent feature of legitimate commerce: AHG at [3521].

190    Before determining whether Plus500’s conduct is against the statutory prohibition, it is necessary to deal with a preliminary argument raised by Plus500 to the effect that a finding of unconscionability is precluded by s 12CB(2)(b).

A finding of unconscionability is not precluded by s 12CB(2)(b)

191    Section 12CB(2)(b) – set out at [186] above – provides that s 12CB does not apply to conduct that is engaged in only because the person engaging in the conduct refers a dispute or claim to arbitration. Plus500 contended that s 12CB(2)(b) precludes a finding of unconscionable conduct against it.

192    Plus500 asserts its conduct is “only” referring a dispute to arbitration and is thus protected.

193    In response, Mr AghaeiRad referred to Stewart J’s decision in Karpik v Carnival plc (The Ruby Princess) [2021] FCA 1082; 157 ACSR 1. His Honour construed s 21(2)(b) of the ACL as leaving open the possibility that a referral to arbitration, in conjunction with other factors, may amount to unconscionable conduct: at [148]. His Honour stated that a finding of unconscionable conduct could be made, for example, where “the referral [to arbitration] would, in addition, operate to render the substantive contractual rights illusory and deny access to justice”: at [152].

194    Justice Stewart referred to the decision of the Supreme Court of Canada in Uber as an example of a case in which reliance on an arbitration clause may amount to unconscionable conduct: Karpik FCA at [149] to [151]. As Stewart J observed at [151], Uber concerned unconscionable conduct within the meaning of the equitable doctrine as it applies in Canada, not statutory unconscionable conduct of the kind enacted under s 21 of the ACL and s 12CB of the ASIC Act.

195    The majority of the Supreme Court in Uber held that the arbitration clause was unconscionable and therefore invalid: at [98]. The arbitration clause was held to be unconscionable in equity because there was an inequality in bargaining power which resulted in an improvident bargain: at [93] to [94]. The majority stated that unconscionability does not require that the imbalance of bargaining power was overwhelming, or that the stronger party intended to take advantage of a vulnerable party: at [81] to [82].

196    The inequality in bargaining power was established because “the arbitration agreement was part of a standard form contract” and created a “US$14,500 hurdle to relief” that “a person in Mr Heller’s position could not be expected to appreciate” when he entered into the contract: at [93].

197    The improvidence of the transaction was established because the fees of USD14,500 were “close to Mr Heller’s annual income” even without accounting for his potential travel costs, accommodation, legal representation and lost wages, such costs being “disproportionate to the size of an arbitration award that could reasonably have been foreseen when the contract was entered into”: at [94]. The majority concluded that Mr Heller’s rights were rendered illusory (at [97]):

Respect for arbitration is based on its being a cost-effective and efficient method of resolving disputes. When arbitration is realistically unattainable, it amounts to no dispute resolution mechanism at all. … The arbitration clause is the only way Mr. Heller can vindicate his rights under the contract, but arbitration is out of reach for him and other drivers in his position. His contractual rights are, as a result, illusory.

198    I do not derive any assistance from the decision in Uber, either on the scope of s 12CB(2)(b) or the issue of unconscionability more generally. The decision does not address statutory unconscionability of a kind provided for by s 12CB or which includes an exclusion of the kind found in s 12CB(2)(b). Further, it is clear from the majority judgment that the equitable doctrine of unconscionability in Canada is materially more favourable to a person asserting unconscionability than it is in Australia. I agree with the observations of Beach J in Dialogue Consulting at [392] in this respect.

199    The effect of s 12CB(2)(b) is best resolved by its language construed in context. The word “only” in s 12CB(2) is critical to the proper understanding of its confined operation.

200    The Explanatory Memorandum to the Trade Practices Amendment Bill (No 2) 2010 confirms that s 12CB(2)(b) has a confined operation and was intended to exclude the mere step of instituting a legal proceeding or other arbitral process against a person. It includes at [4.36]:

Matters to which the court must or may have regard

…

The existence of a legal dispute, manifest in legal proceedings, between two parties is not in itself determinative of unconscionable conduct on behalf of either party. Subsection 21(3) of the ACL provides that a person is not taken to have engaged in unconscionable conduct merely because the person instituted legal proceedings or another arbitration process against another person. [Schedule 1, item 1: Chapter 2, Part 2-2, subsection 21(3)]

201    Section 12CB(2)(a) precludes an argument that the step of instituting proceedings can, of itself, amount to statutory unconscionable conduct. Section 12CB(2)(b) precludes an argument that the step of referring a dispute to arbitration can, of itself, amount to statutory unconscionable conduct. Read in the context of subs (a), subs (b) is directed to excluding the mere step of referring a dispute to arbitration, in the sense of instituting an arbitration, from constituting statutory unconscionability.

202    Plus500’s conducting in enforcing cl 23.3 is not conduct “only … referring a dispute to arbitration” within the meaning of s 12CB(2)(b). Plus500 is not beginning or instituting an arbitration process against Mr AghaeiRad; nor is it referring a dispute to arbitration. Rather, Plus500 is seeking to enforce cl 23.3 by way of a defensive application in a proceeding instituted by Mr AghaeiRad intended to prevent Mr AghaeiRad’s proceeding from continuing by seeking to have the Court permanently stay that proceeding and refer the dispute to arbitration. This is not the sort of situation to which s 12CB(2)(b) is directed.

203    In any event, Plus500’s conduct cannot be characterised as conduct “engaged in only because” Plus500 “refers to arbitration a dispute … in relation to the supply” of financial services. Mr AghaeiRad’s complaint concerns the enforcement of a term contended to attract s 12CB because of the term’s effect, if valid and enforceable, in preventing him from bringing proceedings and because of the circumstances in which it was agreed. The conduct about which complaint is made is not “only” a referral to arbitration.

204    Contrary to Plus500’s submission, s 12CB(2)(b) does not preclude a finding of unconscionability against it.

Denial or limitation on access to justice

205    One of Mr AghaeiRad’s primary submissions was that, in enforcing the arbitration clause, Plus500 would deny or limit access to justice. He submitted that the likely effect of enforcement of the arbitration term is that his claims, and those of group members, would never be determined: AS[152].

206    I accept that the likely effect of enforcement of the arbitration term would be to deny or substantially limit access to justice. I also accept that, if these proceedings are stayed and referred to arbitration, it is unlikely that a litigation funder would fund Mr AghaeiRad’s claim, or other claims, in the unlikely event that other group members would be prepared to take claims to arbitration, with or without their own litigation funding. I consider Plus500’s contentions to the contrary to be divorced from practical reality.

207    As to Mr AghaeiRad’s individual claim, I accept that Mr AghaeiRad would not prosecute his own claim in an unfunded individual commercial arbitration: AghaeiRad 1 at [52]. I accept the evidence of Mr Walker and Mr Way that they would not recommend to their respective funding entities that those entities extend litigation funding to Mr AghaeiRad to advance his claims in an individual arbitration because it would not be economically feasible: Walker at [88] to [91]; Way at [21] to [22]; AS[156]. I do not consider it plausible that any litigation funder would fund such an arbitration having regard to the size of the claim, the legal and factual complexity of the claims made, and the likely costs of such an arbitration.

208    I consider it unlikely that there would ever be an arbitration of multiple claims let alone the claims of all group members. Unlike the position in a representative proceeding where group members must opt out, if there were to be an arbitration, group members would need to participate in a referral of each of their individual disputes to arbitration, assuming each individual in fact brought their claims to the point of arbitration by following the procedures in cl 23.3. As a practical matter, this is unlikely to occur. Should individual arbitrations commence, each individual might remain personally liable for some or all of the costs of the arbitral process: Morrison at [439]. After referral to arbitration, each group member must then consent to a common regime for consolidation. This is because arbitrators must act in accordance with the agreement of the parties and cannot create or extend the authority conferred upon them: TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; 251 CLR 533 at [12]. I do not accept that a litigation funder would fund numerous arbitrations to be consolidated or dealt with in a way which would see the claims of the numerous likely group members addressed.

209    Plus500 contended that there was no foundation for Mr AghaeiRad’s contention that the arbitration term rendered his substantive legal rights illusory because there are several avenues through which he could pursue his legal rights fairly, and without unnecessary expense or delay, including Plus500AU’s IDR procedure, mediation, the AFCA scheme and arbitration: 1RS[111] to [117]. Plus500AU observed that the objects of the NSW Arbitration Act are specifically to “facilitate the final and fair resolution of commercial disputes by impartial tribunals without unnecessary delay or expense”: Explanatory Note, Commercial Arbitration Bill 2010 (NSW) at 1; 1RS[114]. Plus500AU observed that the AFCA scheme was designed to be an “accessible, low cost forum” governed by ASIC: 1RS[113].

210    None of these other dispute resolution mechanisms provide a sensible means of resolving the sorts of issues which Mr AghaeiRad seeks to raise. Reliance by Plus500 on cl 23.3 prevents recourse to a court and any external dispute resolution procedure that involves an independent assessment of the dispute apart from AFCA and arbitration, the latter of which customers would not pursue.

211    The AFCA scheme is an alternative low-cost dispute resolution procedure of benefit to customers, which Plus500 could not exclude. However, enforcement by Plus500 of the arbitration term in cl 23.3 deprives a consumer dissatisfied with the resolution of their case by AFCA of recourse to a court. This subverts the ordinary operation of the AFCA Rules, which expressly provide that “the Complainant is not bound by the Determination and may bring an action in the courts or take any other available action against the Financial Firm” if they do not accept the determination: at r A15.4 of the AFCA Rules (2020 version).

212    Further, the AFCA scheme is not intended to, and does not, provide a substitute for a court proceeding. It is purposefully designed to address disputes in ways which are different to courts: (a) AFCA may make a decision considering what is “fair in all the circumstances” having regard to, inter alia, legal principles, as well as the rules of evidence and precedent (AFCA Rules, rr 14.2 to 14.3); (b) AFCA generally determines disputes on the papers rather than in a hearing; and (c) AFCA does not have representative claims. Given the complexity of Mr AghaeiRad’s case, including the claims he makes about the systems which Plus500 is alleged to have put in place, the AFCA scheme is unlikely to provide an appropriate mechanism for resolution of the claims he makes.

Section 12CC(1)(a), (f), (j), (k): Negotiation of contract

213    Mr AghaeiRad was provided with a link to, and was required to accept, the User Agreement before he could complete registration and trade on Plus500’s platform. Mr AghaeiRad was not in a position to negotiate amendments to the User Agreement – see: s 12CC(1)(j)(i). Mr AghaeiRad was in a weaker bargaining position – see: s 12CC(1)(a).

214    The User Agreement was a standard form contract within the meaning of Div 2 of the ASIC Act – see: s 12BA(1) and s 12BK. Plus500 submitted that Plus500’s unwillingness to negotiate the terms of the User Agreement, and any imbalance in the strength of the parties’ bargaining positions, was consistent with its conduct in transactions with all other users on its platform – see: s 12CC(1)(f). This may be accepted.

215    An arbitration clause may be common in some commercial contexts. It was not shown to be common in a context relevant to the present case. It was not shown to be common in the context of a standard form agreement directed to consumers within the meaning of the ACL or, more relevantly, to consumers within the meaning of the ASIC Act of financial services of a kind provided by Plus500. Neither of the expert arbitrators called to give evidence gave an example of a consumer claim (in any context) ever going to commercial arbitration.

Section 12CC(1)(c), (i): Lack of understanding

216    Plus500 submitted that the User Agreement was clear and unambiguous and that the arbitration term could not have been expressed more clearly than stating that a dispute “shall be and is hereby submitted to arbitration in accordance with, and subject to, Resolution Institute Arbitration Rules”: 1RRS[58]. Plus500 submitted that Mr AghaeiRad’s fluency in English, as apparent from his affidavit and cross-examination, and the fact that the clause is “similar to clauses found in other consumer contracts”, meant that Mr AghaeiRad should have had no difficulty understanding the arbitration clause: 1RS[120].

217    Mr AghaeiRad was able to understand the relevant words used in the User Agreement – see: s 12CC(1)(c). He did not in fact read the User Agreement. Whilst the literal meaning of the arbitration term is relatively clear, the consequences of it were not. Even if Mr AghaeiRad had read cl 23.3, he did not understand (and many or most others in his position would not have understood) that the arbitration term operated to exclude him from bringing an action in court or participating in a representative proceeding as an applicant or group member: AghaeiRad 1 at [35] to [36]. Plus500AU did not take any step to inform Mr AghaeiRad that one consequence of the terms of the User Agreement was that he would not be able to bring court proceedings against Plus500AU.

218    Most customers of Plus500AU would not read the User Agreement before accepting it. Plus500 must have known that to be the case because of the circumstances in which the User Agreement would ordinarily be accepted. Many (if not most) of Plus500AU’s non-professional customers would not have appreciated the effect of the arbitration term of preventing them from bringing a court proceeding, including a representative proceeding. Most customers would not have known that the User Agreement contained an arbitration clause, or that the User Agreement contained a term which could be used by Plus500 to seek a stay and referral to arbitration should the customer commence court proceedings.

219    To the extent a customer considered the issue, most customers would have assumed that a proceeding, including a representative proceeding, could be brought if Plus500AU had engaged in conduct of a kind involving a breach or breaches of statutory norms of conduct or breaches affecting multiple customers. That assumption would not have been altered by reading the User Agreement because the arbitration term in cl 23.3 does not make clear that they would not have been able to bring proceedings. As mentioned earlier, the User Agreement would have been clearer if it expressly excluded representative proceedings.

220    The failure to disclose the intention to use the arbitration term to prevent a class action – irrespective of whether that was an intended purpose behind including the arbitration term into the User Agreement – was unreasonable for the purposes of s 12CC(1)(i)(i).

221    Although the terms of the User Agreement were readily available to Mr AghaeiRad and to Plus500AU’s customers more generally, the intended enforcement of the arbitration clause “affects the interests of the service recipient” because it would prevent the customer from bringing proceedings in a court, including by way of representative proceeding. It is one thing for commercial parties to negotiate and agree that disputes be submitted to arbitration to the exclusion of courts; it is another for a standard form contract directed to consumers who are unlikely to read the agreement to incorporate a term the effect of which is to prevent any court proceeding, including class actions. A more transparent dealing with ordinary consumers of financial services at risk of losing substantial sums of money through a platform said to provide investment opportunities would involve being open and direct about the User Agreement containing an arbitration term, the enforcement of which would prevent any court proceeding the customer might wish to bring, including a representative proceeding.

Section 12CC(1)(b): Protection of legitimate interests

222    Plus500 submitted that the arbitration clause was reasonably necessary to protect Plus500AU’s legitimate interest in having a common procedure and a common forum for the resolution of disputes with its customers; complying with its obligations as an AFSL holder; and facilitating the final, fair, efficient and cost-effective resolution of the types of complaints Plus500AU typically receives: 1RS[119].

223    In providing for IDR and mediation, cl 23 can be seen to be “reasonably necessary for the protection of the legitimate interests of the supplier” – see: s 12CC(1)(b). For the reasons given earlier, the arbitration term was not reasonably necessary for the protection of the legitimate interests of the supplier.

224    Mr AghaeiRad submitted that the arbitration term does not in fact enable the fair and cost-effective resolution of low-value complaints, being the kind of complaints which Plus500AU was most likely to receive: T252.45–253.1. Mr AghaeiRad submitted that, by foreclosing class actions, Plus500AU prevented the most obvious cost-effective means of litigating complaints that might otherwise be uneconomic to bring: T253.1–2.

225    So far as the evidence disclosed, no claims have been taken to arbitration and no individual claims have been commenced in any court. So far as concerns arbitrations, this is likely to be because those consumers who have sought resolution of their grievances (including through IDR, mediation and the AFCA scheme), but remain dissatisfied, do not consider a commercial arbitration to be sufficiently economic or practical to pursue. So far as concerns proceedings in a court, consumers who made a complaint to Plus500 and threatened court proceedings were likely to have been informed by Plus500 of its position that consumers are not entitled to bring such proceedings. I note in this respect that, under its Complaints Procedure, after registration of a complaint by a customer, Plus500 would provide a written acknowledgment informing consumers of its “dispute resolution process” and the availability of AFCA: CBC1728–9.

226    As a matter of practical reality, the arbitration term does not provide a reasonable mechanism for the resolution of disputes which continue after any IDR, mediation or determination under the AFCA scheme (which contemplates the availability of going to court). Enforcement of the arbitration term operates to insulate Plus500AU from any arbitration (by reason of cost or impracticality), any court proceeding and any class action. Whilst Plus500 has an obvious commercial interest in insulating itself from such processes, the arbitration term cannot be characterised as “reasonably necessary” for the protection of a legitimate interest in having a common procedure and a common forum for the resolution of disputes. It operates to ensure that there is no accessible forum for the resolution of disputes which continue past the dispute mechanisms of IDR, mediation and the AFCA scheme.

Global assessment

227    Taking all the foregoing matters into account, and noting that some considerations pull in different directions, I consider reliance on, or enforcement of, the arbitration term in cl 23.3 is outside the norms of acceptable commercial behaviour, as explicitly and implicitly found in the ASIC Act, so as to be against the statutory conception of conscience contemplated by s 12CB.

228    What is involved here is an investment platform marketed to a broad base of consumers, including large numbers of unsophisticated consumers, many “investing” small sums of money, whose knowledge and understanding of the financial products offered, which included trading in CFDs, would be quite limited. It was known to Plus500 that many (around 80%) of its non-professional investor customers lost money through the Plus500 Trading Platform.

229    Enforcement of the arbitration term in cl 23.3 effectively prevents examination of the claims made against Plus500 because of the cost and impracticality of bringing those claims in an arbitration and the inability, if the arbitration term in cl 23.3 is enforced, to make those claims in a court proceeding. As mentioned earlier, these claims include concerns about:

    the manner in which the CFDs and Plus500 Trading Platform were marketed to the public;

    the manner in which prospective traders were encouraged or “nudged” through financial incentives and inducements to sign up or commence, re-commence or increase the frequency and volume of trading;

    the manner in which traders, once an account was opened, were encouraged or “nudged” through notifications by email, push notifications and SMS to continue or re-commence trading or to increase the frequency and volume of trading;

    the operation by Plus500 of a “systemic referral program” known as “500Affiliates”, under which third parties were incentivised to refer as many investors to Plus500 as possible, without Plus500 having sufficient systems to guard against various matters including referrals of unsuitable potential investors;

    the manner in which the Plus500 Inducements, the Plus500 Notifications and the Plus500 Affiliates Program, together with the design and “choice architecture” of the Website, App and Trading Platform operated to target investors’ neural reward systems and to encourage impulsive or compulsive, addictive and high risk-taking trading behaviour;

    the terms of the User Agreement which regulated the contractual relationship between Plus500AU and the traders or investors, including the terms providing for Plus500 to make “Margin Calls” which, if not met, resulted in an “Automatic Close Out” and the imposition of “Inactivity Fees”, “Withdrawal Fees”, a “Spread” and other fees;

    a “Demo Account”, which investors and potential investors were permitted to access and use with a notional amount of AUD50,000, topped up automatically, which did not accurately reflect the real risk of Margin Calls and Automatic Close Outs; and

    the manner in which Plus500AU assessed the suitability of investors and potential investors to trade CFDs through the Plus500 Trading Platform.

230    I have considered the detailed evidence given by the expert arbitrators and the litigation funders. Whilst Plus500 advanced a case that Mr AghaeiRad’s claims, and those of others who might have similar complaints, could all be dealt with by arbitration, perhaps consolidated, and that litigation funding could be obtained, I have no hesitation whatsoever in rejecting that possibility as at best highly unlikely, and at worst, fanciful.

231    I have considered each of the factors in s 12CC and sought not to focus on some to the exclusion of others. In particular, I have taken into account the commercial reality that Plus500 should profit in offering its Plus500 Trading Platform and is entitled to protect its own commercial interests. However, the mechanism chosen to protect itself operated to prevent the kinds of claims, which it must have appreciated were likely, from ever being brought – including class actions and claims such as those made in this proceeding. It is one thing to offer to a broad base of consumers the financial products which Plus500AU does; it is another to prevent those consumers from bringing claims in a court such as those which Mr AghaeiRad wishes to bring without clearly communicating to those consumers, at the time of contracting, that they will not be able to do so.

232    In my view, enforcement of the arbitration term in cl 23.3 is outside the norms of acceptable commercial behaviour, as explicitly and implicitly found in the ASIC Act, as to be against the statutory conception of conscience contemplated by s 12CB of that Act.

CONCLUSION

233    The interlocutory applications should be dismissed with costs.

Associate:

Dated:    16 December 2025